To say that it has been an eventful week in the investment management industry would be a huge understatement. Neil Woodford – who was once known as the most successful stock picker in Britain – has been sacked as the fund manager of the Woodford Equity Income Fund and it has been announced that the fund will be wound up. You can read more about this here.
Given this shock development, there’s a lot of information for investors to process right now. With that in mind, here are three things you need to know if you’re invested in a fund that was run by Neil Woodford.
Woodford Investment Management is closing down
While Woodford initially stated that the decision to sack him as fund manager of his flagship fund was one that he could not accept, the situation changed dramatically in the space of just a few hours on Tuesday.
Not only did Woodford announce that he would be standing down as manager of his other two funds, the Woodford Income Focus Fund and the Woodford Capital Patient Trust, he also advised that his firm Woodford Investment Management would be closing down.
“We have taken the highly painful decision to close Woodford Investment Management,” Woodford said. The reason? Without the huge fees that the Equity Income Fund generates (around £455,000 per week), it’s simply not viable to run the firm, according to the fund manager.
The Income Focus Fund has been suspended
Since then, the Income Focus Fund has been suspended in the same way that the Equity Income Fund was suspended in June. The fund’s Authorised Corporate Director, Link Asset Services, made the decision to halt trading in the fund in order to prevent investors rushing to withdraw their money, which could impact the running of the fund.
Link has advised that the fund will be suspended until further notice but said that it expects to provide an update in the next few weeks.
Meanwhile, the Woodford Patient Capital Trust, which is listed on the London Stock Exchange, is still trading. However, its share price has fallen to an all-time low. According to a statement on Woodford’s website, the board of directors is in advanced discussions about the ongoing management of the company’s portfolio and expects to be in a position to announce details of the new management arrangements shortly.
Return of money
Finally, if you’re wondering when you’ll get your money back if you’re invested in the Woodford Equity Income fund, it’s not great news.
Link has advised that the liquidation process will begin on 17 January 2020. However, liquidating the entire fund is likely to take time. According to some experts, it could take over a year to fully close the fund and return money to investors. Unfortunately, you could be waiting a while to get your money back.
Additionally, investors should also be aware that they may receive back less than they invested as the fund has continued to underperform recently. All in all, the Woodford situation is a complete debacle and not a good look for the investment management industry.
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