Investments  

Fate of second Woodford fund 'known within weeks'

Fate of second Woodford fund 'known within weeks'

The administrators of the Woodford Income Focus fund expect to make a decision on its future “within weeks”, they have told investors. 

The fund was suspended on October 16 after Neil Woodford resigned as manager and announced his intention to shut his firm.

This was after investors withdrew £7.5m per working day from the fund in June. 

In a letter to investors in the fund published today (October 30), Link, which is the authorised corporate director, wrote there were three options for the fund, the first being to appoint a different manager.

The company said it has had “expressions of interest” from several firms in taking on this work and has retained the services of an investment research firm to assess the options. 

The second option being considered was to merge the fund with another. In that scenario the investors in the Woodford Income Focus fund would receive units in the merged fund to replace the units they currently own.

Investors would be given the chance to vote on whether to accept any such merger proposal. 

The final option was to liquidate the fund and return cash to investors.

In its letter Link said: “Whilst we are considering options for the fund, Woodford continues to work collaboratively with us in its capacity as the investment manager of the fund which continues to be managed in accordance with its investment objective and strategy as set out in the fund’s prospectus.

"As authorised corporate director of the fund we continue to ensure the fund is managed in accordance with applicable regulations.” 

Woodford Investment Management is serving a three-month notice period as the manager of both the Income Focus fund and Patient Capital.

Mr Woodford’s larger Woodford Equity Income fund is presently being liquidated while the investment trust he resigned from, Patient Capital, appointed Schroders as manager earlier this month. 

The Income Focus fund has lost 18 per cent over the past year to October 30, compared with a gain of 6 per cent for the average fund in the IA UK Equity Income sector in the same time period.

That ranks the Income Focus fund bottom of the sector. 

However, the recent revival in the performance of value stocks has meant that since the suspension, the fund has performed better than the UK market, returning 1.3 per cent, compared with 1.1 per cent for the FTSE All share in the same time period. 

The fund holds none of the illiquid or unquoted investments that have blighted the Equity Income fund.

david.thorpe@ft.com