The UK's best-known fund manager is blocking investors from withdrawing their money after catastrophic losses

Neil Woodford, among the UK's best-known fund managers, suspended withdrawals from his flagship fund.

He halted dealings in his £3.7 billion ($4.7 billion) Woodford Equity Income fund after 23 months of net withdrawals and a 45% drop in its value over the past year.

Shares in key investor Hargreaves Lansdown and fund holdings such as Allied Minds, Circassia, Eve Sleep, Kier, Purplebricks, and Redde tumbled on the news.

Watch Hargreaves Lansdown, Allied Minds, Circassia, Eve Sleep, Kier, Purplebricks, and Redde trade live.

The UK's best-known fund manager risked trashing his reputation this week after he prevented investors from pulling their money out of his flagship fund. Once a star stock picker, Neil Woodford on Tuesday suspended dealings in his £3.7 billion ($4.7 billion) Woodford Equity Income fund on Monday in response to a relentless flow of withdrawals and to buy himself time to convert some of its investments into more liquid assets, according to the BBC.

Woodford Equity Income has underperformed rival funds since early 2018, fueling 23 consecutive months of net withdrawals by investors, according to the Financial Times. They have taken out £560 million in the past four weeks, the newspaper said.

That's resulted in a 45% decline in the fund's value in the past year, according to Hargreaves Lansdown, an investment platform that holds a £1.4 billion stake in Woodford Equity Income and has heavily promoted Woodford's funds.

A £250 million withdrawal request from Kent County Council prompted the fund's authorized corporate director to suspend buying or selling for up to 28 days, according to the BBC.

The rationale for blocking investors from accessing their money is to protect those sticking with the fund, and because “a significant reduction in fund size jeopardizes [Woodford's] ability to run the fund effectively,” said Hargreaves Lansdown.

When investors regain control of their investments, they're likely to be worth significantly less as the fund's holdings have tumbled in value since the suspension. Shares fell 4% in Hargreaves Lansdown on fears investors would blame the platform for recommending Woodford's funds and move their money elsewhere. Early-stage investor Allied Minds slid 5%, pharmaceuticals group Circassia dropped 8%, and online mattress-seller Eve Sleep slumped 7%.

Claiming investors were undervaluing UK stocks ahead of Brexit, Woodford has bet big on domestic equities. However, several of those investments have proven disastrous: construction group Kier has plummeted 85% in the past year, online estate agent Purplebricks has plunged 72%, and support-services firm Redde has tumbled 42%.