Woodford investors face £10m wind up cost

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Woodford investors face £10m wind up cost
Neil Woodford

Investors who have been trapped in the stricken Woodford Equity Income fund could be facing more than £10m in charges for the cost of winding down the fund.

In a letter to investors, sent yesterday evening (January 29), the fund’s administrators Link Fund Solutions said £10.3m had been put aside for or already spent on transaction, brokerage, legal and audit fees involved in the fund’s closure.

Nearly £5m of this has gone towards costs already accrued from October 15, 2019 — when it was announced the fund would be wound down — while £5.3m has been provisionally set aside for future costs.

This money, alongside income distribution, has been siloed from the pot of funds ready to be distributed to investors today (January 30).

A hefty £22.5m has also been subtracted from the pot heading into investor’s pockets as this sum is needed to honour previous investment pledges made by Mr Woodford.

Such promises include young companies such as Rutherford Health, many of which have underperformed.

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...Ryan Hughes, AJ Bell

Earlier this week (January 28) investors were told they would receive between 46.3p and 58.9p per share, depending on who was involved in the fund’s distribution and whether the investor was in accumulation or receiving an income on their investment.

This showed losses of between 20 and 40 per cent for investors, depending on when they invested in the former-star manager's fund.

The assets involved in this part of the payout represented about 70 per cent of the fund, made up primarily of the sellable, liquid holdings fund house Blackrock had been tasked with winding up.

The remaining assets — the illiquid holdings — are still in the process of being sold by PJT Park Hill so investors remain in the dark regarding the full value of their return. 

Yesterday’s letter also informed investors the fund price would now only be updated on a weekly basis — rather than daily — which indicates Link predicts the price will change less frequently due to the slow process of selling off illiquid assets.

Ryan Hughes, head of active portfolios at AJ Bell, said the £10m of fees and costs would be seen as “another kick in the teeth” for investors who had already seen “substantial losses”.

He added: “This update also gives an indication that Park Hill has made little progress on the selling down of the illiquid assets and, while unsurprising, this will be disappointing for investors.