More than 300,000 investors trapped in Neil Woodford’s flagship fund have been told they face delays in getting back some of their cash orphaned in the frozen fund.
The £3bn LF Woodford Equity Income (BLRZQ73) fund was suspended in June.
Today, the fund’s administrator, Link Fund Solutions, told trapped investors that they now face waiting to at least 30 January to receive the first instalments of the return of cash. Link had previously set 20 January date for initial cash returns.
Investors are expected to be handed back around two-thirds of their holdings at the end of this month after BlackRock, which is in charge of selling off the fund's listed stocks, raised £1.9bn from sales, or about 63% of the fund's assets.
‘Investors will be disappointed by the news that the initial payment will be delayed from the date given in the communication last month but ultimately it’s important the fund is wound up in the appropriate manner’, said Ryan Hughes, head of active portfolios at AJ Bell.
‘Link has provided a further update on how the liquidation is going and news that BlackRock has now sold down 90% of their element is positive.’
HARD TO SHIFT PRIVATE STAKES
But the problem is the stakes in unlisted businesses, whose illiquidity caused the problems for the Woodford fund in the first place.
‘There remains little hint as to the progress that Park Hill are making with the illiquid element of the portfolio and this may be an indication that these disposals are proving to be challenging’, said Hughes.
‘Given this represents around one third of the fund, investors should expect the liquidation process to continue for a considerable period.
‘With updated performance figures, it is clear to see that even in the wind up of the fund, investors have received no respite from the underperformance of the market, with the portfolio lagging by a further 5% since Woodford was removed as manager of the fund with the bulk of this underperformance coming from the illiquid parts of the portfolio having their value reduced.’
This week it was reported that Neil Woodford and his partner Craig Newman shared a £14m dividend bonanza just months before the fund’s collapse.
‘Attention will now focus on the next communication on 28 January when investors will get their first indication of how much the initial payment will be’, said AJ Bell’s Hughes.
