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Neil Woodford dumped as suspended fund is wound up

By Simon Neville, PA City Editor

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.

The full value of the assets Mr Woodford had bought will be returned those who invested in the fund. Any rise or fall in the value of the assets will be passed onto investors.

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 “Woodford” name would go from the fund, Links said, with Mr Woodford’s company no longer having any involvement and receiving no further payments.

The removal of Mr Woodford’s name comes at the culmination of an affair that has damaged his previously stellar reputation. Once among the City’s most lauded investors, he was able to attract billions of pounds into the fund.

Equity income funds are normally bought into by amateurs who ask a fund manager to invest in different businesses for them.

But, from reportedly being worth £10.2 billion in May 2017, the fund struggled to plug holes as investors pulled out around £10 million every day. By the time it was suspended in June, the Woodford fund was only worth £3.7 billion.

The outflow caused a headache for Mr Woodford, who had invested heavily in illiquid unlisted companies whose shares are difficult to sell for cash to return to investors. Advice dictates that funds should only hold 10% of investors’ money in unlisted businesses.

Mr Woodford lashed out at Tuesday’s decision, saying: “This was Link’s decision and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income Fund investors.”

The winding-up would start after 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.”

Specialist broker Park Hill will continue attempting to sell off the unlisted assets, while BlackRock will be tasked with selling the listed shares.

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.

Politicians were quick to condemn the events.

Catherine McKinnell, interim chairwoman of the Commons Treasury Committee, said: “If it hasn’t done so already, surely now the fund should waive its fees.”