Investors in the former Woodford Equity Income fund could face an even longer wait than expected for their cash as the wind-up process drags on.
Writing to investors about the now-titled LF Equity Income fund, administrator Link Fund Solutions advised investors that the wind-up of assets could go beyond 2022 – taking the saga into its fourth year.
In the letter, Karl Midl, managing director at Link, said: “Due to the nature of the fund’s remaining assets and our commitment to achieving the best outcome for investors, it is possible that the wind-up of the fund may not be completed by the end of 2022".
Moira O’Neill, head of personal finance at interactive investor, said this was “guaranteed to add insult to injury”, after an already long wait. Indeed, it has been 787 days since the wind-up began in January 2020 and could mean the process takes more than 1,000 days if it runs into 2023.
The ‘Woodford saga’ began back in June 2019 when former star manager, Neil Woodford, was forced to suspend dealing in his £3.7bn flagship portfolio following a period of disappointing performance, concerns over illiquid holdings and a flurry of redemption requests – which he was unable to meet.
In October 2019, Woodford was removed from the fund and a wind-up process began in early 2020. While the listed, easy-to-trade portion of the portfolio has already been sold, some unlisted companies remain difficult to shift.
According to Link Fund Solutions £2.5bn has been paid out to investors so far with £140.9m still in the fund. This total was spread across nine remaining holdings: Atom Bank, Benevolent AI, Drayson, Mafic, Nexeon, Origin, RM2, Rutherford Healthcare and Sabina Estates.
O’Neill said that investors have been left without answers and their “pain” had gone unrecognised in this update.
“There’s no specific date for the fifth capital distribution and no guarantee that a wind-up of the fund will happen in 2022. This is people’s hopes and dreams for retirement dashed, and we’d like to see more understanding of this,” she said.
O’Neill called on the Financial Conduct Authority (FCA) to provide investors with answers soon, noting that they needed “some kind of closure” but instead had faced “deafening silence”.
In the letter, Midl said that remaining investors could expect an update around 30 July 2022, or when the fund was able to make its fifth capital distribution “whichever is earlier”.
Ryan Hughes head of investment research at AJ Bell, said that investors “may be heartened” that the value of the remaining assets has increased by 13% since the last update in February “which compares favourably to the performance of the FTSE All Share index”, although will be “of little comfort given the longer-term performance”.
He said investors’ primary focus would be when they can finally get the remainder of their money back, but Link has shown “no commitment in the latest update on this front”.
It has been 15 months since the last distribution, “which shows just how challenging it is to try and sell the remaining assets into a market where the buyers hold all the cards,” he added.
Although Link is trying to ensure it can get the best possible prices for the assets, Hughes said it was important to balance the length of time investors have to wait.
“I suspect many would now simply accept a lower price to get the sale completed so they can draw a line under this sorry saga and move on, not least as we are now close to three years since the fund suspended,” he noted.