Neil Woodford has apologised to investors after confirming his embattled Woodford Equity Income fund is likely to stay closed until early December.
In an update to investors the manager said: “I understand the frustration, inconvenience and anxiety the continued suspension of the fund will be causing you and I am extremely sorry for putting you in this situation.”
The manager promised that he is making progress in reducing the fund’s exposure to unquoted companies and illiquid assets, adding that when the fund does re-open the portfolio will have more FTSE companies in it. Some 80% of the proceeds of assets which have been sold since the fund’s suspension have been put into FTSE 100 firms, he confirmed.
The Woodford Equity Income fund was forced to suspend trading on June 4 after a flood of redemption requests from investors saw its assets reduce from a peak of £10.2 billion to £3.7 billion. Investors were concerned about the fund’s poor performance and the high proportion of its assets invested in early-stage and start-up businesses.
After 28 days suspended the fund confirmed it would remain closed – with investors unable to buy or sell units for the foreseeable future. Fund manager Neil Woodford has now said he anticipates that the fund will re-open in early December.
Thanking investors for their patience, Woodford said he is sticking with his strategy of finding undervalued companies, but added: “Admittedly, this strategy has not delivered the returns we had anticipated over the past couple of years, which is why the fund is in the situation it is in today.”
Woodford admitted that the suspension of the fund has had a further impact on short-term performance but says “the worst is now past”.
Clarity for Investors?
Ryan Hughes, head of active portfolios at AJ Bell, said the update provided much-needed clarity for investors, who at last have a timeframe to work towards: “The fact that Link Fund Solutions and Woodford have given a timeframe suggests they have some confidence in the fund re-opening in December, but this will still mark six months of fund suspension that investors will have had to navigate.”
The manager also confirmed that the fund’s annual management charge will remain in place, to cover the cost of infrastructure and resources. The firm has been widely criticised for not waiving the 0.75% fee as gesture of goodwill to investors trapped in the fund.
The update comes on the same day it was revealed that Woodford had sold 1.75 million of his shares in his Patient Capital Investment Trust in early July, without informing the trust’s board of directors. Woodford said the sale was to “meet personal financial obligations, including a tax liability”. The firm added that Neil Woodford remains invested in the trust and committed to its long-term investment potential.
The Board also revealed that it has held preliminary discussions with other companies and was considering replacing Woodford as manager of the trust.
While there has been speculation about the viability of Woodford Investment Management being able to continue running as a business after such heavy outflows from its funds, the firm has refuted this. “There are many funds available in the marketplace that are viable with fraction of the size of Woodford’s assets under management,” it said.
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