Fund manager Neil Woodford’s flagship Equity Income fund will remain gated to investors for more than four more months.
Investors will be unable to access their savings held in the Woodford Equity Income fund (WEIF) until early December, Link Fund Solutions, the authorised corporate director of the fund, said on Monday.
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The fund had originally been frozen on 3 June after its poor performance led to a torrent of investor redemptions that left it facing a liquidity crisis, as many of its investments were in small unlisted companies.
Link, which said earlier in July that the fund would remain gated indefinately, said the further four months will provide “a realistic amount of time” for Woodford to continue implementing the new strategy to re-position the portfolio towards larger, liquid companies, as well as ensuring that there is adequate liquidity for further potential redemptions.
Woodford, who has continued to charge fees on the suspended fund, told investors yesterday that he was “extremely sorry for putting you in this situation”.
It was calculates that his Woodford Investment Management company will have bagged roughly £12mln in fees from investors since the vehicle was first suspended.
Progress reported
“Since our last update a month ago, we have made progress with our strategy to reduce our exposure to unquoted and less liquid stocks,” he said, but said he would not share details of exactly what has changed yet.
“What you will see when the fund re-opens, is a portfolio with more FTSE 100 and FTSE 250 companies (80% of the proceeds from share sales since suspension have been reinvested in FTSE 100 companies), but still reflecting the same investment strategy.”
The delay until early December will mark six months of fund suspension but will at least give investors “much-needed clarity” about the time frame and suggests Link and Woodford are confident in the fund re-opening by that time, said Ryan Hughes, head of active portfolios at AJ Bell.
WEIF has fallen 3.3% since it closed in June, compared to the FTSE All Share return of 5.3% during that time, while in July the fund has risen by almost 1% versus 1.8% for the market.
The fund manager has also been rocked this week by the news that the independent board of his eponymous Woodford Patient Capital Trust (LON:WPCT) is talking to other investment managers as they mull a potential change.
Said Hughes: “The latest comments from the Patient Capital investment trust board will give further pause for investors in Woodford’s funds, and show a hint at the potential tension between the board and Woodford Investment Management. But as investment trust boards are independent it’s good to see them fulfilling their responsibilities as independent directors.”