Timetable set for Neil Woodford fund repayments
Administrators have finalised details for the winding up of Neil Woodford’s Equity Income Fund (WEIF), the suspension of which triggered a scandal that led to the collapse of his investment empire.
In a letter to investors today, Link Fund Solutions said the process of winding up the fund will begin on 18 January. The final valuation of WEIF’s assets will occur the day before, with the first payments to investors expected in late January.
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Blackrock and Park Hill are currently selling off the fund’s assets, with the former responsible for the disposal of WEIF’s listed assets, and the latter responsible for its unlisted and illiquid holdings.
In today’s letter, Link said Blackrock has realised £1.65bn since its appointment, representing 79 per cent of the fund’s listed assets and 56 per cent of its overall value.
This gives the fund a total valuation of £2.95bn, meaning it has dropped almost 19 per cent since its suspension in June.
None of the fund’s unlisted holdings have yet been sold by Park Hill.
Ryan Hughes, AJ Bell’s director of active portfolios, said this “indicates that investors are likely to be waiting for some time before they get all their money back”.
Link said it was working with Park Hill to explore how to sell WEIF’s illiquid holdings, but could not confirm when they would be sold.
“It’s likely that Park Hill has had offers but none that it deems acceptable,” said Hughes.
Investors have been unable to access their cash since the fund was gated in June after becoming overwhelmed by redemptions.
Read more: Woodford Equity Income investors may not get money back for a year
Link, which was responsible for overseeing WEIF’s suspension, announced in October that it had decided to fire Neil Woodford as manager, wind up the fund and return cash to investors.
Woodford resigned as manager of his remaining two funds shortly afterwards, and then announced the closure of his investment business.
The process of winding up the fund is expected to take up to a year from January. Link said today it anticipated making “a series of payments to investors over the coming months”.
The administrators said 18 January was the soonest possible date the process could begin, as investors have to be given three months’ notice of the winding up of a fund.
Link had previously insisted the sell off of WEIF’s assets would be an “orderly” process after concerns were raised about the possibility of a fire sale as administrators attempted to offload assets as quickly as possible.
“It is important to note that BlackRock has managed to realise the assets in Portfolio A in a way that safeguards value in those assets rather than through a ‘fire sale’,” Link told investors today.
The cash from Blackrock’s sale of the assets has been re-invested in “FTSE 100 index instruments, money market funds, government securities and commercial paper with short maturity date”.
This strategy would retain investors’ exposure to equity markets while maximising the liquidity of the underlying portfolio until it could be returned to investors.
Blackrock will continue to liquidate the remaining 21 per cent of the WEIF portfolio assigned to it, which comprises “generally less liquid stocks than those assets sold so far,” said Link.
Neil Woodford this week moved out down his Oxfordshire offices as he continues the process of shutting down Woodford Investment Management.
Read more: Neil Woodford shuts offices as investment business winds down
The firm, which employed 60 people at its peak, has been operating on a skeleton workforce since the embattled stockpicker announced its closure in October.
Schroders, which has taken over the running of the Woodford Patient Capital listed investment trust, today filed documents to officially change its name to Schroder UK Public Private Trust.