Woodford fund investors face hefty losses as payouts begin
Investors in the Woodford Equity Income Fund are starting to find out how much of their investment they will salvage as the stricken fund is wound up.
In a letter published by Link Asset Services, the gated fund’s administrator, shareholders have been told they will receive an initial payment of between 46.3633p and 58.9936p for every share they hold in the fund, depending on what type of shares they have. It compares to a price of 100p per share when the fund launched five years ago.
All shareholders will receive individual notifications of the specific amount they will receive, with the payment due around 30 January.
The payouts follow the sale of the fund’s listed assets, thought to be mainly large and medium-sized companies. A number of harder-to-sell unlisted assets still need to be offloaded.
Ryan Hughes, head of active portfolios at AJ Bell, said: "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, there is still huge uncertainly 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 holding that Park Hill are trying to sell."
PJT Park Hill is a boutique bank that has been appointed to offload the fund’s most illiquid assets. BlackRock conducted the sale of the listed assets.
At its peak, the Woodford Equity Income Fund managed more than £10bn. But a lengthy period of underperformance prompted a spate of investor redemptions and in June last year, to halt further redemptions, Neil Woodford suspended the fund, leaving around 300,000 investors trapped.
The highly unusual move sent shockwaves through the sector. It also hastened the end of Woodford’s investment empire and his once stellar reputation as a stock picker.