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Woodford flagship fund to be wound up
15th Oct 2019 08:38
(Sharecast News) - The flagship investment fund of one-time stockmarket star Neil Woodford is to be wound up, its administrator said on Tuesday.
Cash from the £3.5bn Woodford Equity Income Fund, which has been suspended since June, would be returned to investors, Link Fund Solutions (LFS) said in a letter.
However, they would not get any money back until mid-January at the earliest. LFS added. Withdrawals from the fund were frozen as investors started to demand repayment. Woodford was criticised as he continued to charge management fees.
"Whilst progress has been made in relation to repositioning the fund's portfolio, this has unfortunately not been sufficient to allow reasonable certainty as to when the repositioning would be fully achieved and the fund could be re-opened," LFS said.
"We have therefore concluded that it is now in the best interests of all investors for the Fund to be wound up by way of an orderly realisation (which) will allow the return of money through interim payments to investors more quickly than if the fund had remained suspended for a longer period of time."
Woodford's name is also being removed from the fund, which will be renamed the LF Equity Income Fund, and the assets handed to BlackRock and Park Hill for sale. The founder said the decision to shut the fund was Link's "and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income fund investors".
Rules state that there must be a three month notice period to wind up a fund, so nothing was expected until January 17 at the earliest.
"Today's announcement at least confirms the end to a sorry saga but this will be of cold comfort for investors locked in the fund," said AJ Bell head of active portfolios Ryan Hughes
"Woodford has not managed to move out of his unlisted assets and into more liquid listed equities quickly enough to re-open the fund in December, meaning Link has determined it's in the best interests of investors for the fund to close entirely.
"For the Woodford debacle to have any positive outcome it must now serve as a catalyst for the FCA to speed up its review of illiquid assets held in UCITs funds."
"While no mention is made of Woodford's other funds, it now seems highly unlikely that he will remain in place as manager of the Patient Capital investment trust, with the board already looking at potential replacements. Woodford Income Focus has now fallen below £300m, having returned a loss of 20% over the past year."
Cash from the £3.5bn Woodford Equity Income Fund, which has been suspended since June, would be returned to investors, Link Fund Solutions (LFS) said in a letter.
However, they would not get any money back until mid-January at the earliest. LFS added. Withdrawals from the fund were frozen as investors started to demand repayment. Woodford was criticised as he continued to charge management fees.
"Whilst progress has been made in relation to repositioning the fund's portfolio, this has unfortunately not been sufficient to allow reasonable certainty as to when the repositioning would be fully achieved and the fund could be re-opened," LFS said.
"We have therefore concluded that it is now in the best interests of all investors for the Fund to be wound up by way of an orderly realisation (which) will allow the return of money through interim payments to investors more quickly than if the fund had remained suspended for a longer period of time."
Woodford's name is also being removed from the fund, which will be renamed the LF Equity Income Fund, and the assets handed to BlackRock and Park Hill for sale. The founder said the decision to shut the fund was Link's "and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income fund investors".
Rules state that there must be a three month notice period to wind up a fund, so nothing was expected until January 17 at the earliest.
"Today's announcement at least confirms the end to a sorry saga but this will be of cold comfort for investors locked in the fund," said AJ Bell head of active portfolios Ryan Hughes
"Woodford has not managed to move out of his unlisted assets and into more liquid listed equities quickly enough to re-open the fund in December, meaning Link has determined it's in the best interests of investors for the fund to close entirely.
"For the Woodford debacle to have any positive outcome it must now serve as a catalyst for the FCA to speed up its review of illiquid assets held in UCITs funds."
"While no mention is made of Woodford's other funds, it now seems highly unlikely that he will remain in place as manager of the Patient Capital investment trust, with the board already looking at potential replacements. Woodford Income Focus has now fallen below £300m, having returned a loss of 20% over the past year."