Woodford Equity Income Fund is to be wound up and money returned to investors starting in January 2020. Woodford Investment Management is no longer running the fund.

The fund’s authorised corporate director Link Fund Solutions says the decision has been taken not to reopen the fund in which dealing has been suspended since 3 June.

Asset manager BlackRock has been appointed to sell the listed assets from the fund and broker Park Hill will handle the disposal of the illiquid assets.

‘Today’s announcement at least confirms the end to a sorry saga but this will be of cold comfort for investors locked in the fund,’ says Ryan Hughes, head of active portfolios at AJ Bell.


Investors were previously expecting to get their money back in December this year but Link says it will now take a bit longer so as to avoid a fire-sale of assets, namely dumping them at any price.

‘One of the objectives of the orderly realisation process is to maximise returns for investors. That means that it is important for the assets to be realised at a time when the sale will achieve an appropriate level of return. Selling the shares in the less liquid assets, on a "fire sale" basis would significantly reduce the value of these assets,’ says Link.

It is expected that the first batch of money will be returned to investors at the end of January 2020. The amount available for distribution to investors is unknown at the stage as it will depend on how quickly the assets can be sold at a fair price.


Link says it doesn’t know when further payments will be made to investors.

‘We had agreed with the Depositary and Woodford that we would seek to complete the repositioning of the fund’s portfolio by early December 2019 to enable the Fund to re-open, but that we would monitor progress to ensure that this date remained achievable,’ explains Link.

‘It was agreed that it would not be possible to lift the suspension and re-open the fund until the sale of its unlisted and less liquid listed assets was completed.

‘Failure to do so before the re-opening of the fund would risk a further suspension and unequal treatment of investors, particularly for those who chose to continue to remain invested in the fund.

It adds: ‘Whilst progress has been made in relation to repositioning the fund’s portfolio, 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.’


The fund has fallen 17% by value since dealing was suspended four months ago.

This next chart shows how the fund has dramatically underperformed the broader market over the past few years.

The blue line represents the Woodford fund's total return, so including dividends, while red line represents the UK All Companies sector. Click on the chart to see a larger version.

Analysts at investment bank Stifel believe there is now a greater chance that Woodford Patient Capital (WPCT) investment trust will appoint a new manager and also be wound down.

‘With Woodford Investment Management effectively in wind-down, we think the board of WPCT does now need to appoint a new manager as a matter of necessity, given the trust does not pay an annual management fee (only a performance fee) and Woodford IM will have little revenue to pay its expenses now that there is no fee income from the equity income fund.

‘We think that any new manager of WPCT will expect a conventional annual management fee to be paid going forward.

‘We also think the wind-up of the equity income fund increases the likelihood that the board of WPCT will decide to put the trust into run-off, with investments realised gradually over a number of years and cash returned to investors once the bank debt (£111m at 26/09/19) is repaid.’

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Issue Date: 15 Oct 2019