Delistings from The International Stock Exchange: what does it mean for the fund?

The ‘unquoted limit’ is a UCITS restriction on the maximum (10%) the fund is allowed to invest in securities not listed on or to be admitted to an eligible exchange. Following the announcement by Benevolent AI and Industrial Heat on 30 July 2019 to de-list from The International Stock Exchange (TISE), the latter has announced they have taken the decision to de-list Ombu with effect from 1 August 2019, meaning an inadvertent passive breach of the fund’s 10% limit will occur. The FCA's guidance, as for all UCITS limits, is that funds should be brought back into compliance following an inadvertent passive breach in a manner that is in the clients’ best interests and within six months of the date of discovering the relevant breach.

The companies held in the LF Woodford Equity Income Fund that are, or have been, listed on TISE have always been classified as illiquid and valued by Link in line with its Fair Value Pricing policy (which is also adopted for valuing the fund’s unquoted stocks). This continues to be the case.

Following the inadvertent passive breach, action to bring the fund back into compliance is already underway. On 3 May, we informed investors that the fund’s exposure to unquoted securities would be significantly reduced ­– including those listed on exchanges where there is currently little or no trading activity. The decision by Benevolent AI and Industrial Heat to delist from TISE and the de-listing of Ombu by TISE will have no impact on how the assets are managed within the fund.

Important information

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