Woodford Equity Income Fund

It has been announced today that the Woodford Equity Income fund will be wound up. Previously the intention was to re-open the fund once illiquid unquoted stocks were sold but this is now considered not to be in investors’ best interests. The decision was made by Link Fund Solutions Ltd, the Authorised Corporate Director (ACD) of the fund not Woodford Investment Management. An ACD is an authorised firm which administers a fund’s investments, handles the purchase and redemption of shares in fund and ensures the assets of fund are properly valued. They have the power to sack a fund manager and unfortunately for Neil Woodford this has now happened with immediate effect. The fund will be renamed the LF Equity Income.

The winding up of the fund will commence on 17th January 2020 and it will be undertaken in an orderly manner to avoid a fire sale of assets and investor detriment. A number of capital distributions is intended with the first expected at the end of January. What investors will get back will naturally depend on stock market conditions and the costs the winding up process will incur. For example Blackrock has been appointed to sell listed securities and naturally there will be fees.

It is likely that most investors will lose money on their investment and naturally I am sorry for clients that I recommended the fund to. The only consolation is that investors who bought Woodford’s funds when he was at Invesco enjoyed excellent returns over many years. This makes the extent of Woodford’s fall quite incredible and sobering for IFAs like myself who believe in active fund management. The industry and the regulators will be looking to see if the problems with Woodford are more widespread and will try to ensure there is no repeat or systemic risk for investors.

More information about the decision to wind up the Woodford Equity Income fund can be found in the article from Link Fund Solutions Ltd:

https://woodford.linkfundsolutions.co.uk/media/yr2dbqm2/15th-october-2019-investor-letter-regarding-the-winding-up-of-the-lf-woodford-equity-income-fund.pdf