Hundreds of thousands of investors trapped in the flagship fund of disgraced stockpicker Neil Woodford are facing steep losses, as details emerge of the first payout since the fund was gated in June.
Initial payments of between 46.3p and 58.9p per share will be made to investors, administrator Link Fund Solutions said in an update this morning.
Read more: Woodford fund investors face payment delay
This represents 74 per cent of the current fund value of the Woodford Equity Income Fund, now known as the LF Equity Income Fund, and is the result of the offloading of the most liquid — and therefore easiest to sell — holdings.
The fund was suspended in June after it became overwhelmed by investor withdrawal requests, sparking the investment industry’s biggest crisis in years.
The scandal eventually led Woodford to shutter his business in October, after Link decided to fire him as the fund’s manager and liquidate its holdings.
The fund’s value had declined steadily in the months leading up to its suspension on 3 June, and its value has declined 19.8 per cent since it was gated. By contrast, the FTSE All-Share benchmark gained 7.2 per cent in the same period.
Link officially began the process of winding up the fund earlier this month. Blackrock was charged with selling off its liquid assets, while Park Hill is responsible for disposing off the fund’s illiquid holdings — a process that is expected to take much longer.
Link said investors can expect the first repayment to reach their accounts on 30 January.
AJ Bell head of active portfolios Ryan Hughes told City A.M. the repayment was “the start of closure for investors”, but added: “since the fund has been suspended, it’s also been falling in value, so it’s not like it’s putting them back in the position they were in before”.
“The remainder is tied up in the illiquid assets, which are still going to take considerably longer to sell,” said Hughes.
“Selling the liquid holdings was the easy bit. For Park Hill, it is a hugely challenging task to sell the illiquid holdings in a timely fashion and investors still remain in the dark as to how long they will have to wait for the remainder of their money, and importantly, how much they are actually likely to get back.”