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Woodford investors hit with £10m fund wind-up fees

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Written by: Paloma Kubiak
30/01/2020
Woodford investors face a fresh blow as the administrator revealed winding-up the defunct fund has cost £10m.

Trapped investors of LF Equity Income fund (formerly LF Woodford Equity Income fund) have been told they’ll receive a share of £2.1bn as part of the first cash return today after it was frozen last year.

This figure is the equivalent to 75.55% of the value of the assets of the fund as of last week.

However, administrator Link Fund Solutions revealed transaction fees, brokerage costs and legal fees associated with the wind-up of the former flagship fund have come to £10m.

Earlier this week investors were told 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 by Blackrock. Money is still trapped as the illiquid assets still need to be sold by Park Hill.

‘Kick in the teeth for investors’

Ryan Hughes, head of active portfolios at AJ Bell, said: “It looks as if investors will be suffering around £10m of fees and costs to wind up the fund which will be seen as another kick in the teeth for investors who have already seen substantial losses on their investments.

“This update also gives an indication that Park Hill have made little progress on the selling down of the illiquid assets and, while unsurprising, this will be disappointing for investors. With no timescale being given on how long this element is likely to take, investors should brace themselves for a long wait for the remainder of their money.

“Link has also announced the fund price will now only be updated on a weekly basis rather than daily which reflects the reality that little will change in the portfolio and investors should watch the price carefully to see how it is impacted by any revaluation or sale of the remaining assets.”

The Woodford Equity Income fund was suspended in June 2019 following an increase in redemption requests which couldn’t be readily met. But in October, Link confirmed the £3bn fund would be wound-up with cash returned to investors as soon as possible.

Neil Woodford, once considered Britain’s best stock picker, was sacked as manager of the fund and Woodford Investment Management was closed down.

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