The suspended Woodford Equity Income fund will be wound up and the cash returned to investors - a decision Neil Woodford has said is “not in the interests of investors.”
The fund was suspended in June after a wave of redemptions that ran at £9m every working day amid concerns about the fund's poor performance.
The fund’s administrators - Link - originally intended to re-open the fund in December and Mr Woodford has spent the past four months selling hundreds of millions of pounds of stock, much of it in unquoted or illiquid assets, and re-positioning the fund into FTSE 100 shares.
Mr Woodford insisted this was to improve liquidity, and did not represent a shift in his worldview.
But this morning Link called time on these efforts, announcing the process of closing the fund down would begin in January and that Mr Woodford's company had been fired as manager.
It said: "Over the last few months, a process had been underway to reposition the fund’s portfolio into more liquid assets. Link Fund Solutions had agreed with the depositary and Woodford Investment Management that it would seek to complete the repositioning by early December 2019, and that LFS would monitor progress to ensure that this date remained achievable.
"Furthermore, it was agreed that it would not be possible to lift the suspension and re-open the fund until the sale of the unlisted and less liquid assets was completed. Failure to complete this process before the re-opening of the fund would risk a further suspension.
"Whilst progress has been made in relation to repositioning the fund’s assets, this has unfortunately not been sufficient to allow reasonable certainty as to when the repositioning would be fully achieved and the fund could be re-opened.
"LFS has concluded that an orderly realisation of the fund’s assets allows the return of money through interim payments to investors more quickly than if the fund had remained suspended for a longer period of time."
In a letter to investors, Link wrote: “We recognise that this will come as a disappointment to some investors. However have concluded that the winding up of the Fund is now in the best interests of all investors.”
The fund will now be divided into two portions: a listed segment, portfolio A, and an unquoted segment, portfolio B.
BlackRock Advisers will manage portfolio A while PJT Partners will manage portfolio B. Both companies have been appointed with the sole objective of selling the holdings in their respective portfolios.
PJT was already working in this role with Woodford.
The fund name will change to LF Equity Income, to reflect the fact Mr Woodford is no longer involved.
The intention is to return cash to investors “at the earliest opportunity" - which is likely to be January.
In response Mr Woodford said: “This was Link’s decision and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income fund investors.”