Cash to be returned
Troubled Woodford Equity Income Fund to be wound up
Fallen star: Neil Woodford
Neil Woodford has been dismissed from his eponymous Equity Income Fund which will be wound up by Link, its administrator, and cash returned to investors.
Investors have been warned that they may lose up to 70% of their money held in the £3 billion fund.
Link Fund Solutions (LFS) has concluded that an “orderly realisation of the the Fund’s assets allow the return of money through interim payments to investors more quickly that if the fund has remained suspend for a longer period of time”.
The fund was suspended on 4 June after a spike in investor redemptions. At its peak it managed £10.2bn of assets, such as local authority pension funds. It had been expected to reopen it December – but it became clear that would not happen.
Mr Woodford later resigned from the two other funds which bear his name – Patient Capital Trust and Income Focus.
In a statement, Link said: “Over the last few months, a process had been underway to reposition the fund’s portfolio into more liquid assets, LFS had agreed with the Depositary and Woodford Investment Management (Woodford) that it would seek to complete the repositioning by early December 2019, and that LFS would monitor progress to ensure that this date remained achievable.
“Furthermore, it was agreed that it would not be possible to lift the suspension and re-open the Fund until the sale of the unlisted and less liquid assets was completed. Failure to complete this process before the re-opening of the fund would risk a further suspension.”
In a statement, Mr Woodford, whose owns a £13.7m mansion in Gloucestershire, said: ‘We have taken the highly painful decision to close Woodford Investment Management. I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management.’
Baroness Altmann, a former pensions minister, said the huge fees generated by Mr Woodford’s company added insult to injury for savers and described his downfall as a reminder to regulators to provide better protection for investors.
Chartered financial planner Martin Bamford of Informed Choice , said investors in WEIF “should prepare to experience a loss of between 30% and 70%” with the higher figure being being a “worst-case scenario”.
Link says the size of the first cash distribution will depend upon how quickly the value of the fund’s assets can be realised.