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A Year On From Its Suspension Woodford Fund Investors Are Still Waiting For Their Money

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With the one-year anniversary of its suspension approaching, the 300,000 investors that were trapped in fallen fund manager Neil Woodford’s Equity Income Fund are still waiting for their money. While some instalments have been made, the job of selling off the fund’s assets has proven arduous and administrator Link Fund Solutions has still to confirm a date for the final payout.

Mr Woodford had forged a reputation at fund house Invesco as one of the UK’s most talented stock pickers before deciding to go it alone. His Woodford Equity Income fund was his flagship fund after setting up his own fund house and heavily promoted to small private investors by Hargreaves Lansdown, the UK’s largest online investment platform.

The fund invested heavily in illiquid assets, mainly the shares of still private companies in the biotech and tech space. When investors began to run out of patience with the falling value of these holdings and started to withdraw their funds en masse, the fund was unable to sell these assets quickly enough to prevent a liquidity crisis. That eventually led to the fund being first suspended and then eventually wound down, with Mr Woodford sacked from his own fund by its administrator.

At its peak in autumn 2017, the Woodford Equity Income fund was worth £10.2 billion. Withdrawals had seen that value eroded to just £3.7 billion by the time it was suspended. The fund’s holdings didn’t perform better following its suspension and their value dropped by another 20% to £2.87 billion by January this year. Investors were frozen in over that period.

In late January, Blackrock, one of two companies assigned with selling off the fund’s assets, paid out £2.12 billion to investors. That was mainly made up of the fund’s more attractive and sellable assets. A further £143.2 million was paid out in March by Blackrock and PJT Park Hill, the second company facilitating sales. PJT Park has the job of selling off the less liquid assets in the fund’s portfolio.

After the deduction of around £43 million in fees and other costs, plus a small boost to the valuations of remaining assets between January and March, it is estimated that around £570 million of assets remains in the fund. 

A £10,000 investment in the Equity Income fund when it launched in 2014 would currently have returned £7144. Investors are hoping there is a little more to come when the last assets can be liquidated. With markets currently quiet thanks to the blow of the Covid-19 pandemic, when those less liquid assets can be sold off is an open question.

One investor in the fund quoted in The Times newspaper, 67-year-old retired BT manager Peter Baker commented:

“It is a long time to wait to get all our money back, and I’m disappointed, though not surprised, that the share price has gone down since the fund was suspended. Fortunately, I have spread my investments around widely, so the poor performance of this fund won’t affect me too badly. It’s frustrating that the unquoted investments are taking such a long time to sell, but I rather expected that would be the case.”

Mr Baker invested £2000 in the fund. Fund administrators Link last week told investors:

“We will continue to keep investors fully updated in relation to all material matters regarding the winding-up of the fund.”

Risk Warning:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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