Neil Woodford investors remain in limbo

The completion of the winding up of the fund may roll on until 2023.

Investors in the closed Woodford Equity Income fund remain in limbo as to when they will get the rest of their money back.

In the latest update to investors, the fund’s administrator Link Fund Solutions said they are unable to put a date on when investors will receive the next payment. The value of the fund’s remaining assets is £140.93 million. This total amount may change depending on the sale of companies still in the fund’s portfolio.

A total of £2.54 billion has been returned to investors in four separate payments from the sale of the fund’s assets.

Link, however, were tight-lipped on when the fifth payment will be made. It cautioned that the wind up of the fund may go beyond the end of this year.

Link said: “The sale of the remaining assets, and future capital distributions to investors, will continue but at a pace which seeks to achieve the best outcome for investors.

“At this stage we are unable to provide a specific date for the fifth capital distribution, or for the completion of the winding up of the fund.

“Due to the nature of the fund’s remaining assets and our commitment to achieving the best outcome for investors, it is possible that the wind up of the fund may not be completed by the end of 2022.”

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The remaining assets in the formally named LF Woodford Equity Income fund and managed by Neil Woodford are: Atom Bank, Benevolent AI, Drayson, Mafic, Nexeon, Origin, RM2, Rutherford Healthcare and Sabina Estates.

The background

For more than 25 years at his previous employer Invesco, Neil Woodford gained a strong reputation for consistently beating the UK stock market and rival fund managers. In 2014, having left Invesco, he set up his own fund management business, Woodford Investment Management.

Many investors followed Woodford to his own fund shop and the Woodford Equity Income fund grew to around £10 billion at its peak in 2017.

However, Woodford’s performance turned sour. A series of bad stock selections led the fund to underperform and caused many investors to get itchy feet. The fund shrank to around £3 billion in size prior to its suspension.  

On 3 June 2019, shockwaves rippled through the fund management industry as Britain’s most prominent fund manager barred investors from accessing their cash.

Ordinarily, equity fund managers would sell down their holdings, but the issue that exacerbated the problem for Woodford was a large weighting to illiquid investments in the form of unquoted shares, which are not easy to trade quickly.

In the months that followed, Woodford attempted to move the fund away from these illiquid holdings; but two months prior to its scheduled re-opening in December 2017, Link Fund Solutions stepped in and fired Woodford.

As a result, the fund was wound up and investor money, was set to be returned to investors.

Link Fund Solutions appointed BlackRock and Park Hill to help sell the remainder of the assets, with the proceeds given to investors in the fund over a series of payouts.

The Financial Conduct Authority (FCA) is still investigating the suspension and collapse of the Woodford Equity Income fund.

Dzmitry Lipski, head of fund research at interactive investor, says: “After almost three years of misery for tens of thousands of investors, today they got more questions than answers.

“With no specific date for the fifth capital distribution and no guarantees that a wind up of the fund is in sight this year, today’s Link letter will rub salt in the wounds of investors. We can only hope that the FCA will have some answers soon, because investors need closure of some kind.”