Editor’s Letter

The trials of Woodford continue

As we go to press, BlackRock has sold over half of its stocks in the Woodford Equity Income fund, worth around £1.7bn.

Administrator Link Fund Solutions nominated BlackRock and PJT Park Hill to offload the assets after the fund was suspended. They seem to be intent on making this a speedy job.

Link said that Blackrock sold 79% of the liquid Woodford stocks referred to as Portfolio A and 56% of the overall portfolio.

The money from the disposal has been re-invested in FTSE 100 index instruments, money market funds, as well as government securities, among others.

The administrator noted that the remaining assets to be offloaded are less liquid.

“As a result we anticipate that selling these remaining assets in Portfolio A may take longer than it took to realise the assets sold to date,” the administrator noted.

The fund will now operate under the name LF Equity Income and start winding up on 18 January 2020.

The first payment is expected to be calculated on 6 January 2020, with the first payment expected to be delivered to investors by 20 January 2020.

Furthermore, PJT is still looking at ways to get rid of the less liquid assets.

The scandal over this big player will have many looking over their shoulder in the New Year.

Geopolitical unrest

After the UK’s general election resulted in a resoundingly secure majority for Boris Johnson and the Conservative Party, I’m certain the private banking sector slept soundly.

For now, heads will turn to the US and the upcoming battle between Donald Trump and whichever Democrat (out of the 5,000 running) gains the nomination.

According to UBS (see in this issue), two-thirds (66%) of investors believe that geopolitical events drive the markets more than business fundamentals.

The top geopolitical concerns are:

  • US-China trade conflict (44%);
  • Political environment in my market (41%), and
  • 2020 US Presidential election (37%).

Globally, 82% of investors wish to get advice on the US Presidential election. This jumps up to 92% in Latin America and 84% in Asia.

It shows that one political victory is not enough. Consistency is what the sector seeks, but that looks to be a distant pipedream at the moment.

Patrick Brusnahan

Editor, Private Banker International