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Final £500m in flagship Woodford fund ‘almost worthless’

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01/06/2020
This Wednesday marks the first anniversary of the suspension of the Woodford Equity Income fund and frustrated investors are still waiting to get their money back.

However, this final chunk of trapped money is “almost worthless”, according to one investment expert.

While £2.3bn has so far been paid out to investors, there’s still around £558m stuck in the fund invested in illiquid, unlisted investments, according to latest valuation figures.

Adrian Lowcock, from investment platform Willis Owen, said these proved hard enough to sell during the bull market of 2019 but could be almost impossible to offload now, with the UK heading towards what could be its deepest recession in living memory thanks to the global coronavirus pandemic.

“As we approach the first anniversary of the suspension of Woodford’s flagship fund, investors are wondering if they will ever get the rest of their money back,” he said.

“The bulk of the portfolio was sold in January and the money returned, which was good for investors – albeit scant consolation for the losses they incurred.

“However, what was always going to be more problematic was selling unlisted private equity investments, which were the reason Woodford got investors into this mess in the first place.”

Lowcock said the backdrop is “acutely unfavourable” now for anyone trying to sell these assets.

“These investments were hard to sell in 2019 but now in 2020, with the UK facing the deepest recession in history along with most of the rest of the world, that outlook has worsened.

“Holders of the fund may find that the remaining investments are almost worthless, and they may not get much back after costs on any further disposals by the fund.”

Former star manager Neil Woodford was forced to suspend his flagship fund on 3 June 2019 because he could not meet a surge in redemption requests following a period of poor performance.

In October 2019, the fund’s administrators confirmed the £3bn fund would be wound-up with cash returned to investors as soon as possible.

Trapped investors received the first tranche of payments from the sale of assets in January.

Woodford, who was once considered the UK’s best stock picker, was sacked as manager of the fund, his other two funds were handed to new managers, and his firm, Woodford Investment Management, shut.

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