Investors in two of Britain’s largest income funds, Invesco High Income and Income, have suffered a 5pc loss because of action taken to raise cash and avert a Neil Woodford-style crisis.
Fund manager Mark Barnett, once Neil Woodford’s protégé, has chosen to dump all the private companies in his £3.4bn and £1.5bn funds at a considerable 60pc discount to their expected value. This resulted in a 5pc paper loss for all investors.
It was done to avoid a “liquidity” crisis, where Mr Barnett would not be able to return cash to investors if they kept taking money out of the fund. This is because private companies are harder to sell than companies listed on the stock market and the time lag can cause a cash shortfall.
An article by telegraph.co.uk