The 300,000 investors locked into Woodford’s funds since June have been told they have lost nearly a fifth of their money and that selling the remaining assets is proving more difficult than expected, in the latest grim update from the fund’s administrators.
The Woodford name, once one of the stars of the investment industry, will also be immediately erased from the multibillion-pound equity income fund he managed until it was suspended in June.
The fund will be renamed the LF Investment Fund, representing the Link Fund Solutions group appointed to wind up the fund.
Link said it had sold 79% of the shares in the Woodford fund, achieving a total sale price of £1.65bn. It said that on 20 January investors will begin to receive their money back.
But the remaining 21% of the shares, and the “unlisted” holdings (investments in companies not quoted on the stock market), are worth a further £1.3bn, and the administrators have run into trouble selling them.
“At this stage, we are unable to confirm when these assets will be sold,” said Link, referring to the unlisted companies.
It also laid out in detail how much the value of the fund has fallen. Since suspension on 3 June, the fund has lost 18.6% of its value, compared with the 4.1% gain that investors would have made if their money was tracking the FTSE All Share index.
Link added that since 15 October, when it decided to permanently close the fund and sell off its holdings, the underperformance had lessened. The fund had lost 3.2% since then, compared with a gain of 1.1% in the FTSE All Share index.
Ryan Hughes, head of active portfolios at investment platform AJ Bell said: “While the initial liquid assets have been sold, now the hard work begins. Link’s letter indicates that investors are likely to be waiting for some time before they get all their money back as it appears that progress on selling the unlisted and highly illiquid assets has been very slow, with none sold so far and no date for when a sale is likely.
“It’s likely that Park Hill, which is running the sale of these assets, has had offers but none that it deems acceptable. Link has also warned that the remaining 21% of the fund in more illiquid listed assets will also take a while to offload.”
The £1.65bn worth of shares sold has since been placed in FTSE 100 index trackers, government securities and bonds. “This ensures that investors retain exposure to the equity market whilst maximising the liquidity of the underlying portfolio,” said Link.
The fund’s shutdown in June came after a string of bad investment bets that prompted a surge in redemptions that Woodford could not fulfil.
The fund was once worth more than £10bn but fell below £3bn due to withdrawals and a raft of poorly performing investments, including with online estate agent Purplebricks, finance firm Burford and “doorstep lender’” Provident Financial.