LF Woodford Equity Income fund suspension frequently asked questions (FAQ)
For advisers/intermediaries only
What’s happened and what this means for investors
On Monday 3 June 2019, the LF Woodford Equity Income fund suspended trading until further notice. This fund is an Open Ended Investment Company (OEIC) offered across our Aegon Retirement Choices (ARC) and Aegon Platforms.
We recognise that this may be a concern for you and your clients so we’ve put together some frequently asked questions for your clients invested in the fund.
1. What does this mean for investors?
If you have clients that currently invest in this fund, it will be unavailable for selection on their online account and they’ll not be able to buy, sell, or switch until it resumes trading.
As a result, we’ve cancelled any trades placed in the fund on Aegon Retirement Choices (ARC) and the Aegon Platform after 11am on Friday 31 May 2019.
2. What happens to regular payments?
Regular payments can continue, however they will not be paid into the LF Woodford Equity Income fund. Instead, any payments intended for this fund will be re-directed into your client’s individual cash account facility and will remain there until you or they give us a clear instruction to switch into an alternative investment.
3. What happens to single payments and cash transfers?
Single payments and cash transfers will also be accepted, but any proportion intended for the LF Woodford Equity Income fund will be re-directed into your client’s individual cash account facility and will remain there until you or they give us a clear instruction to switch into an alternative investment.
4. Can I produce an illustration including the LF Woodford Equity Income fund?
While the fund is suspended the fund is unavailable for new illustrations. However, if you have existing investors in the fund you can produce review illustrations.
What happens with income or dividends
5. What happens to regular income withdrawals?
If your client currently receives an income from their account, any withdrawals due from the LF Woodford Equity Income fund after 11am on Friday 31 May 2019 will be rejected. As a result, the account will revert to our default option of selling from the largest fund. If you or your client want to select an alternative fund, you can do this via the adviser portal.
6. What happens to dividend payments?
If your current settings for income direct into cash or pay out as natural income, this will continue. If your current settings for income are set to reinvest this will not be possible while the LF Woodford Equity Income fund is suspended and any income will remain in cash.
What this means for model portfolios
7. What are my options for updating model portfolios?
Where you currently run model portfolios containing the LF Woodford Equity Income fund you have the following three options:
1. Do nothing:
- This means you can’t add new clients into those model portfolios.
- You’ll not be able to add any more money to products linked to those model portfolios.
- Existing regular contributions into those models can continue and any money due to be allocated to the LF Woodford Equity Income fund will be allocated to the products cash facility.
2. Amend the model portfolio to replace the LF Woodford Equity Income fund with another fund, replace with cash or redistribute the asset allocation amongst the existing funds. You can do this by amending the model portfolio with the Model Portfolio Manager if you have the relevant access:
- This means when the updated model is saved it is available for new business.
- Any existing investors linked to it won’t have their existing holding updated as no rebalance has been selected.
- Any top ups for existing investors can go into the new version with existing assets unaffected until a rebalance is performed (or an auto rebalance date is due if auto rebalancing is selected for the product).
3. Create a new version of the model portfolio replacing the LF Woodford Equity Income fund with another fund, replace with cash or redistribute the asset allocation amongst the existing funds. You can do this by choosing to copy an existing model portfolio within Model Portfolio Manager if you have the relevant access:
- This means the model can then be used for new clients.
- You can link any existing clients to this model allowing you to submit a top up to existing products.
- Any regular contributions (linked to the model) will be updated automatically to the new model.
- You can decide to rebalance the client to the new model if you have relevant permissions or your client’s agreement. The LF Woodford Equity Income fund will not be included in this rebalance and the remaining assets will be aligned to the new model portfolio.
Please note, in the scenarios detailed above, please allow up to 15 minutes for the newly created or amended model to appear before applying any new trades/instructions.
8. Can I add new clients to an existing model containing the LF Woodford Equity Income fund?
We’re unable to add new clients to existing models containing the LF Woodford Equity Income fund. However, existing models can be updated to remove the LF Woodford Equity Income fund as detailed above.
9. Can I ‘top-up’ an existing model containing the LF Woodford Equity Income fund?
We’re unable to add new monies to existing models containing the LF Woodford Equity Income fund. However, existing models can be updated to remove the LF Woodford Equity Income fund as detailed above. Alternatively, new models can be created mirroring the investments of your previous model but not including the LF Woodford fund. If you want to do this, you’ll need to create a new model (this can be done by copying the existing model and updating it) and either close or rename your previous version.
10. What happens if I trigger a rebalance or have an auto rebalance in place?
If a rebalance is triggered or there is an existing auto rebalance in place on a model containing the LF Woodford Equity Income fund, the suspended fund will be excluded and any money due to be applied to it will be redistributed proportionately in line with the existing model allocation.
11. Can I still build a model with the LF Woodford Equity Income fund in it?
No - while the fund is suspended the fund is unavailable for selection.
12. Will you be contacting investors?
We’ve begun contacting all those affected to tell them about the suspension and what it means for them.
13. What happens if the fund reopens?
If the fund resumes trading, we'll contact all those affected to let them know and outline their options.
When this happens we'll make it clear that if any payments made into the fund while the fund was suspended were re-directed into an investors individual cash facility will remain in the cash facility until you or your client give us a clear and complete switch instruction to invest the funds held in cash into another investment.
14. What happens next
We’re in close contact with Link Fund Solutions (LFS), the LF Woodford Equity Income fund’s Authorised Corporate Director (ACD), and we’re monitoring the fund on a daily basis. We’ll write to you and any of your affected clients again with further information if the fund reopens. In the meantime, any updates will be communicated via the ‘Fund changes and news’ page of our website.
If you have any concerns you can contact us at:
Aegon Retirement Choices (ARC)
Email - email@example.com
Or call us on 0345 680 1234.
Email - firstname.lastname@example.org
Or call us on 0345 604 4001