Neil Woodford is to return to fund management barely less than eighteen months after his Woodford Equity Income Fund was shut down with big losses for investors.
A new fund is being set with US firm Acacia Research, which acquired 19 of the fund’s life sciences investments for £224mln last July.
In an interview with the Telegraph over the weekend, the former star stock picker said he was sorry for what had happened to the Equity Income fund but criticised its administrator Link for selling out of some of the assets too quickly.
The Woodford Equity Income fund foundered after several high-risk bets didn’t come off while its unquoted life sciences investments were hard to sell when it was hit with a wave of redemption requests.
Some of the life sciences businesses have strongly rebounded in value due to the impact of the COVID-19 pandemic and Woodford said history would show those decisions [to sell out] were ‘incredibly damaging’ to investors.
Woodford was removed as manager of the Equity Fund in October 2019 and shut down his investment business shortly after.
Investors in the Woodford Equity Income fund have received about £2.5bn in three payouts since the liquidation process started but all lost substantial amounts of money and are still awaiting a final distribution.
Ryan Hughes, head of active portfolios at wealth manager AJ Bell, said Neil Woodford’s return would be a surprise to many and ‘especially those thousands of embattled investors who are still waiting to get the last of their money back’.
“With around £200m of money still stuck in his previous fund and original investors back in 2014 sitting on losses of over 25% and many thousands who invested later suffering much bigger losses, there will be little sympathy for Woodford and the comments he made in his recent interview.”
The new investment firm will be called Woodford Capital Management Partners (WCM) and only raise money from professionals, said the interview.
It will work with Acacia Research, the business that bought the unquoted life science portfolio from Woodford Equity Income.