Woodford to close his business
Neil Woodford is to close his fund management business following the decision on 15 October by Link Fund Solutions, the authorised corporate director (ACD) of the Woodford Equity Income fund, to wind up that fund. The Woodford Equity Income Fund was the Woodford Investment Management’s main source of income.
Published on 16 Oct 20192 minute read
Woodford Equity Income
Link have decided it is in the best interests of investors for the fund to be wound-up and for cash to be returned to investors. Under UK regulations, the ACD is tasked with the day-to-day operation of the fund, including dealing in the fund’s shares and the accurate pricing of the fund.
The decision to seek a wind-up of the suspended fund, which is not supported by Woodford Investment Management, replaces a previous aim of repositioning the fund into more liquid companies. This would have involved removing all of its unquoted holdings with the intention that it would be able to reopen for investors to withdraw their money, or add new money, by early December 2019. While the fund manager has been progressing with this repositioning, Link have concluded that progress has been insufficient to achieve a reopening of it by year end and therefore they have terminated Woodford as the investment manager of the fund with immediate effect and they will now seek to dispose of its holdings, enabling interim cash payments to investors during the wind-up process.
I hold the Woodford Equity Income Fund, what should I do?
The fund remains suspended and therefore cannot be sold, so no action is required. As the fund is wound-down in stages, investors will receive cash distributions.
Woodford's other funds
Following the decision to wind-up the Woodford Equity Income Fund, the Board of Woodford Patient Capital Trust (WPCT) have served three months termination notice on Woodford Investment Management as manager of the trust and confirmed they are in advanced discussions with an alternative manager. The Board expect to make a further announcement on future management arrangements shortly. WPCT’s shares continue to trade on the London Stock Exchange.
Given the loss of two major mandates, Woodford Investment Management has resigned as manager of the Woodford Income Focus fund, which also has Link Fund Solutions as its ACD. This is a small fund of £252 million and therefore would not be commercially viable for Woodford to manage as a sole fund. Link have taken the step of immediately suspending dealing in the Woodford Income Focus Fund in expectation that the news would provoke significant withdrawals and will now consider its future. This may involve the appointment of a new manager, a merger with another fund or a wind-up.