Woodford fired from flagship fund — which won't reopen after all
The debacle around Neil Woodford’s suspended flagship fund is coming to an abrupt end.
Link Fund Solutions, the authorized corporate director of the Woodford Equity Income Fund, is sacking the disgraced stockpicker from his namesake fund and winding it down. Beginning in January, the firm’s designated brokers will gradually sell off all assets in the portfolio to pay back the trapped investors — with the first installment due by the end of that month.
“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” by the December deadline, Link wrote in a letter to investors.
Woodford, who first froze the Equity Income Fund in June and has since been on a mission to obtain enough cash flow to meet potential redemptions by switching out the private, illiquid parts of the £3.7 billion fund for listed stocks, balked at the announcement.
“This was Link’s decision and one I cannot accept, nor believe is in the long-term interests [of investors],” he said in a statement sent to a number of UK outlets.
Link still needs formal approval from the Financial Conduct Authority to start the process. Having been in contact with the company since June, the regulatory watchdog says it welcomes the removal of uncertainty by Link’s move.
That said, the FCA’s investigation into the activities leading to the suspension of the fund is still ongoing.
BlackRock Advisors has been tapped to handle the liquid holdings, while PJT Partners — which has been working with Woodford on the fire sales — remains in charge of the “less easily sold assets.”
As to how much investors can expect to receive from the winding-up process, FCA has this guidance in its Q&A:
The amount you will receive will depend on the fund’s value and the amount raised by selling the fund’s assets. The fund’s value fluctuates in line with the market values of its underlying assets. If assets are sold for lower prices, you will receive less from the winding-up process and this also may be less than you originally invested.
A number of biotechs backed by Woodford including Immunocore and BenevolentAI have reportedly seen their valuations drop, hurting his — and now Link’s — chances of retrieving nearly as much as he’s put in.
The closing of a well-known fund that managed £10.2 million worth of assets at its peak shocks the market at a time the UK biopharma industry is doing some serious soul searching. In a new report, the Institute for Public Policy Research suggests the life sciences sector has experienced a “lost decade” in which £15 billion in R&D funding that would have been invested in the UK had gone elsewhere.
“This collapse is on a par with the implosion of New Star at the height of the financial crisis, and it will shake the fund’s industry to its core,” Adrian Lowcock, head of personal investment at the investment platform Willis Owen, told the Financial Times.