Invesco Perpetual has implemented a dilution adjustment to the price of Neil Woodford's Income and High Income funds, moving to bid pricing on both portfolios after a recent surge in outflows.
The group confirmed, following redemptions, it has switched to a bid price for sellers of the funds, in order to protect existing investors.
The switch to bid price is only implemented under certain circumstances when a fund has seen a set level of redemptions - usually around 5% - which could impact existing shareholders. However Invesco and other fund managers can use their discretion to implement a change even if the 5% level has not been reached.
In a letter to investors it said: "Under certain circumstances, a dilution adjustment is applied to the price of Invesco Perpetual's ICVC's to protect existing shareholders from the impact of costs related to dealing resulting from subscription/redemption activities by other shareholders."
The current dilution adjustment means investors are getting a bid price which is 0.32% lower than the mid price on Woodford's High Income fund, and 0.34% lower on the Income fund.
The switch to bid pricing - something that was seen across a number of property funds during the financial crisis - comes after Invesco Perpetual last week revealed Woodford's funds had seen about 4% of their assets withdrawn, equivalent to £1bn.
Redemptions have climbed on the news of Woodford's departure, with the manager set to launch his own fund company next year.
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