Fees still being charged
Woodford investors stay trapped in fund until end of year
Neil Woodford: ‘I understand investors’ frustration’
Fallen Star banker Neil Woodford’s flagship investment fund will remain suspended until at least December but investors will still be charged fees, he has revealed.
The Woodford Equity Income Fund was frozen on 3 June after customers attempted to withdraw hundreds of millions of pounds which the fund could not immediately access.
Mr Woodford, one of Britain’s best-known investment managers, said: “I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing you and I am extremely sorry for putting you in this situation.”
He added that the fund has begun selling its investments in unquoted and other less liquid stocks and reinvesting the cash into more liquid FTSE 100 and FTSE 250 shares instead.
Around 80% of the money taken out of the illiquid stocks has been reinvested in FTSE 100 companies, he said.
However, the company said a long extension was required to ensure assets can be sold in a “timely and orderly way” and not at “distressed prices”.
On the decision to continue charging fees, Woodford said: “The company will continue to charge a management fee as we focus on repositioning the portfolio, to cover the infrastructure and resource costs associated with running an actively managed fund.”
However, Willis Owen head of personal investing Adrian Lowcock said Woodford is due to earn £10 million from the management of the fund over the six months that it is forecast to be suspended, while investors have no say or right of access to their investments.
Link Fund Solutions (LFS), the company that administers the fund on Woodford Investment Management’s (WIM) behalf, said the extension of the suspension was to allow time to ensure there is enough money to pay investors who want to cash out.
It said: “LFS has concluded that this approach represents the best outcome in terms of value, time and equal treatment for all investors.
“Importantly, it allows all investors to choose whether they wish to remain invested in or to withdraw their investments from the fund.
“The ongoing work to reposition the portfolio is designed to ensure that there are liquid assets available for these purposes, while continuing with the objectives and investment strategy of the fund.”
The fund has been heavily scrutinised since the suspension, particularly over whether rules were breached on how much investors’ cash should be put into illiquid stocks.
The fund was worth around £10 billion at its peak in 2017, but has fallen to between £3.5b and £4bn.
The FCA has launched an enforcement investigation into the Woodford saga.