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Trapped Woodford investors find out details of first payment

Paloma Kubiak
Written By:
Paloma Kubiak

Investors trapped in disgraced Neil Woodford’s former flagship fund have today received details of how much money they’ll get back as part of the first tranche of payments.

In a letter to investors administrator Link Fund Solutions (LFS) confirmed investors of the LF Equity Income fund (formerly LF Woodford Equity Income fund), would receive the first capital distribution payment on or around 30 January.

While this news may come as relief to investors who have witnessed the fund’s performance dive since trading was suspended and the manager being sacked last year, the payment will fall below expectation.

The capital distribution will vary depending on share class, with investors receiving between 46.36p and 58.99p per share. This is a far cry from the £1 per share listing at launch in June 2014 and £1.38 a share at the peak of the flagship Woodford fund on 2 June 2017.

This is the first tranche of payments made from the sale of liquid assets. Money is still trapped as the illiquid assets still need to be sold.

Money will be paid into investors’ nominated bank accounts. People who hold their investment through a fund platform may receive payment a few days after 30 January due to the way payments are processed.

Ryan Hughes, head of active portfolios at AJ Bell, said: “In some respects, today represents the first day of closure for investors who have suffered from the terrible performance of the Woodford Equity Income fund. However, while this payment of the first tranche of the liquidated assets will be a relief for thousands of investors who have been trapped in the fund since June last year, there is still huge uncertainty around the money still stuck in illiquid assets.

“This payment represents just over 70% of the current fund value and has been raised from the sale of the liquid element of the portfolio. Investors will be acutely aware that a large portion of their investment remains trapped in the illiquid, unquoted holdings that Park Hill are trying to sell.

“Selling the liquid holdings was the easy bit. For Park Hill, it is a hugely challenging task to sell the illiquid holdings in a timely fashion and investors still remain in the dark as to how long they will have to wait for the remainder of their money, and importantly, how much they are actually likely to get back.”