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Invesco Perpetual: we are not imposing a dilution levy on Woodford funds
by Dylan Lobo on Nov 05, 2013 at 12:57
Invesco Perpetual has moved Neil Woodford's income fund range to bid pricing to protect investors from the sharp outflows, while emphasising it is not placing a charge on redemptions.
Invesco Perpetual last week confirmed that around 4% of total funds under management in the franchise, which stood at around £24 billion prior to Woodford handing in his resignation, has now moved out of the fund range.
Invesco Perpetual felt it needed to clarify confusion it saw in the market by stressing it has not imposed a dilution levy, where investors' redemptions are hit with a charge and the proceeds paid into the fund.
Instead it has used what is referred to as a dilution adjustment by moving to bid pricing. This designed to ensure investors are protected from the costs of buying and selling investments when others join or leave the fund.
Invesco Perpetual Distribution head Ian Trevers told Wealth Manager: 'We have moved to a bid basis and it's not a surprise really as we knew there would be redemptions.'
He added: 'Investors are still getting the same value as they would be if they were selling the underlying stocks, everyone is getting full value for their investments. This is a process all fund firms go through when they suffer higher withdrawals than inflows, this is not something new.'
While Trevers had anticipated the outflows once news of Woodford's exit broke, he said so far they have been manageable.
'They [redemptions] have been at the lower end of our scenarios and overall we're please with the reaction we've had. These are large liquid funds and it has been perfectly straight forward to handle the redemptions we've had.'
Trevers said outflows would have to get far more extreme levels before it considers employing a dilution levy.
'There is no charge imposed on investors. We would only use a dilution levy in an highly exceptional scenario and we are nowhere near that,' he said.
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by Alex Steger on Dec 11, 2013 at 10:19