Home / Business / Star UK's fund manager, Woodford, has had to close its competitive flagship fund

Star UK's fund manager, Woodford, has had to close its competitive flagship fund

Britain's best-known fund manager had to liquidate its flagship fund after months of suspension.

In a letter to investors on Tuesday morning, administrators of the Woodford Equity Income Fund managed by Star Neil Woodford, Manager, said the fund would be closed and the money returned to investors at the earliest opportunity.

Woodford has also been removed as investment manager, and the fund is to be renamed.

Letter from administrators Link Fund Solutions (LFS) said the decision had fallen after a careful review of the fund and its holdings.

In a statement, Woodford said, "This was Link's decision and a decision that I can not accept and that does not meet the long-term interests of the investor of the LF Woodford Equity Income Fund."

The Woodford Equity Income Fund suspended in June due to poor performance and a sharp increase in repayments by investors of £ 1

0.2 billion ($ 12.9 billion) in assets under management Woodford reached a high of only $ 3.7 billion at the end of May 2019. GBP.

Woodford's equity income has given investors a 35.9% loss over a three-year period, while its investment trust, Patient Capital, lost 59.21% over the same period. His smaller Income Focus fund has lost 20% in the last 12 months.

Since the suspension, efforts have been made to reposition the portfolio and outsource significant portions of unlisted and illiquid assets. However, the letter to investors on Tuesday indicated that this was "not enough to give reasonable assurance as to when the repositioning would be completed", allowing the fund to reopen.

Fund Assets Divided Into Two Parts The first part consists of listed assets managed by BlackRock in preparation for liquidation.

The second part consists of unlisted and highly illiquid assets resold by LFS with the assistance of specialist broker Park Hill.

Adrian Lowcock, Head of Personal Investment at investment platform Willis Owen, described the news as "really shocking".

"We have witnessed the complete decline of the most famous fund manager Britain has seen in years," he said. The collapse will shatter the fund industry to the core.

What's next for investors?

LFS has waived the fee for the Fund from the June suspension and investors are not charged any direct fees as long as the Fund is in force.

"However, investors continue to incur high costs of liquidating the Fund, particularly the sale of illiquid assets," said Ryan Hughes, head of active portfolios for the AJ Bell investment platform.

] "These costs are deducted from the proceeds of sale and flow into the money the investors get back."

Settlement begins in January 2020, and investors will receive their first money supply from that date. Liquid funds have been sold, Hughes said, but it will take some time for them to get their money back in full.

"The Fund's Liquidity Review Announced by the Financial Conduct Authority (FCA) in April of this Year The year showed that one third of the fund was in assets that would take six months or more to liquidate," Hughes said.

"The portfolio has shifted somewhat since then, but it is unlikely to be such a fast process."

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