Fresh blow for trapped Woodford savers: Payouts from gated flagship fund delayed for a further ten days
Savers trapped in Neil Woodford’s flagship fund have been hit with a further setback after finding out they will have to wait ten more days before they get their first payment.
Link Fund Solutions, the firm charged with overseeing the management of the Woodford Equity Income fund, had promised savers they would receive their first chunk of money on January 20.
But it is understood that Link pushed the payment date back to January 30 because it wanted to give as much money to savers as it could in one go.
Savers trapped in Neil Woodford’s flagship fund have been told they will have to wait ten more days before they get their first payment
More than 300,000 savers have been trapped in Woodford’s Equity Income fund since June, when it was suspended after a run of poor performance.
Justin Modray, of Candid Financial Advice, said: ‘This is yet another kick in the teeth for investors who have been waiting for months to get their money back, while watching their savings dwindle.
‘The news of a ten-day delay, less than two weeks before the date Link had promised savers they could expect their first payment, makes Link appear as though they are making up the process as they go along.’
At the end of January, the fund is expected to return 63 per cent of money, or £1.9billion, to investors.
Link will send a letter to savers outlining exactly how much they will get on January 28.
This is the cash that Blackrock, which was appointed along with private equity firm PJT Park Hill to wind up the fund, has so far been able to raise by selling the listed stocks held by the fund.
But crucially, because the value of the fund has fallen, savers will not get back as much as they put in. Someone who invested £10,000 when the fund launched in 2014 is facing an estimated loss of 16 per cent.
And someone who had an investment worth £10,000 when the fund was gated in June will get back 15 per cent less than they would have done then – or around £8,500.
The rest of the money will be returned at some point in the future, but there are fears this could take years with savers receiving less than expected.
Blackrock and PJT Park Hill must find buyers for the difficult-to-sell, illiquid holdings in the Equity Income fund’s portfolio.
These also include stakes in companies which are not listed on stock exchanges, and which focus on early-stage technology, making them more difficult to value.
Critics believe that many such companies in the Equity Income fund’s portfolio will not attract as much as Blackrock and PJT are accounting for.
Some investors in the Woodford Equity Income fund have had to put major plans on hold because they were frozen out of their savings on June 3 last year.
Susan and her partner Jane, both in their 70s (who did not want to disclose their surnames), invested all of their £30,000 pension pot in the Woodford Equity Income fund.
Susan attempted to withdraw a chunk of her savings the day before Link announced the suspension, in order to replace her broken-down car.
But her request was never fulfilled, and she had to wave goodbye to the car she hoped to buy.
What next for investors?
EQUITY INCOME FUND
Now called the LF Equity Income fund, Woodford’s biggest fund is being wound up by Blackrock and PJT Park Hill. Savers will get their remaining cash back in dribs and drabs.
Blackrock has been selling the listed stocks, and investors will get their first chunk of money from January 30.
PJT Park Hill is in charge of selling the difficult-to-sell unlisted stocks. It is unclear what price it will be able to get for many of these, and the process could take years to complete.
Now named the LF ASI Income Focus fund, Woodford’s smallest fund was taken over by Aberdeen Standard Investments at the beginning of the year. Aberdeen plans to reopen it in February, meaning investors will be able to pull their money.
Aberdeen wants to keep the fund running, and will plough investors’ cash into a portfolio of around 30 UK stocks which can be easily sold to return savers their money. Since the fund was suspended in October, its value has climbed by almost 3 per cent.
PATIENT CAPITAL TRUST
Unlike the other two funds, this trust is listed on the stock market. This means investors have always been able to cash in by simply selling their shares to other investors.
However, they have been doing this at a cost – the trust’s shares are currently trading at a 32 per cent discount to the underlying value of its assets, and are down 59 per cent over the last year.
It has been managed by Schroders since December 13, and is now called the Schroder UK Public Private Trust.