Woodford Investors Lose 40% Of Their Stake In Fund Collapse

Lisa Smith, BA (Hons), CeFA
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Investors are finding out the extent of their losses following the collapse of Neil Woodford’s flagship Woodford Equity Income Fund last year.

More than 300,000 investors have money locked into the suspended fund which was worth nearly £3 billion but is now has administrators scrapping to sell assets to realise the cash.

Much of the money was difficult to sell unquoted investments.

Investors were drawing out £9 million a day to escape the fund in May 2019, before Woodford’s investment empire imploded in June.

The fund could not raise enough cash to cover the withdrawals, so investors were locked out.

Illiquid stocks

Administrators were appointed to sort the mess out and have come back this week with the first indication of what investors can expect to be repaid.

The pay-off depends on the class of share held and ranges from 46.3633p in the Pound to 58.993p.

That represents a loss of between 40% and 63% for investors.

These are not the final figures as specialist administrators Park Hill are still trying to sell some assets.

The payment represents 70% of the current fund value. The rest is tied into illiquid stocks

Ryan Hughes, head of active portfolios at AJ Bell, said: “In some respects, today represents the first day of closure for investors who have suffered from the terrible performance of the Woodford Equity Income fund.

Fall from grace

“However, while this payment of the first tranche of the liquidated assets will be a relief for thousands of investors who have been trapped in the fund since June last year, there is still huge uncertainty around the money still stuck in illiquid assets.

“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.”

Investors have been told to await payments by the end of this month.

Fund manager Neil Woodford was a celebrated stock picker who fell on hard times as many of his choices bombed. His fund value peaked at £10 billion, but Woodford could not repeat his early investment successes and he eventually failed.

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