Neil Woodford dumped as suspended fund is wound up
The Woodford Equity Income Fund, which has been suspended since June, is to be wound up, administrators have said.
Neil Woodford, once hailed as the greatest stock-picker of his generation, has also been dumped from having any further involvement in the fund, with investors told they cannot expect to see their money returned until at least the end of January.
In a letter to investors, Link Asset Services, which administers the fund, said: “After careful consideration, the decision has now been taken not to re-open the fund and instead to wind it up as soon as practicable.”
The fund was initially suspended after worried investors started withdrawing their cash, but, because Mr Woodford and his team had bought stakes in so many unlisted companies, selling the assets was extremely difficult.
Previous advice from Link had been that the fund would be suspended until December, before investors would be given a chance to cash out.
But on Tuesday the decision was made to close it instead.
Link said: “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 reopened.”
The company also informed customers that the “Woodford” name would go from the fund, with Mr Woodford’s company no longer having any involvement and receiving no further payments.
Link said: “The name of the fund will, subject to regulatory process, be amended to reflect the fact that Woodford will no longer be the investment manager to the fund.”
The administrators added that the winding-up would start from January 17 2020, following a three-month notice period during which investors will still be charged fees. Cash will start being returned from the end of January – but only in instalments.
However, there was a warning that the sale could take longer.
Link wrote: “It is not currently possible to predict when the orderly sale of these remaining assets will be fully complete and when the remaining capital distributions will be paid to you and the other investors.”
The fund will be split into two parts – listed and unlisted assets – with new managers from BlackRock tasked with selling the listed shares.
Specialist broker Park Hill will continue attempting to sell off the unlisted assets and return the money to investors.
Mr Woodford has faced heavy criticism over his investment strategy since setting up the fund, due to his preference for investing into unlisted businesses.
The potential for returns on unlisted companies can be far higher than traditional shares, but they can be incredibly difficult to sell on compared with listed businesses.
Advice dictates that funds should only hold 10% of investors’ money in unlisted businesses, but this can be circumvented by creating a listed fund that is made up of all the unlisted parts.
Mr Woodford has also seen several senior staff walk out in recent months over the suspension and led to questions of the Financial Conduct Authority in Parliament on the watchdog’s oversight of such funds.