Neil Woodford's gated unit trust will begin paying back investors a portion of their savings 10 days later than expected, with money managers having so far recovered 63% of the value of the fund from share sales.
The Woodford Equity Income (WEI) fund, which has since been renamed the LF Equity Income fund, will begin to be wound up on 18 January, as expected, and a final calculation of the amount each investor will receive will be made on 24 January.
This is later than the 6 January date the fund’s corporate director Link Fund Solutions had set out in December.
Link said in a letter on Friday that it will send another letter with details of the amount on or around the 28th of the month, with the final payment to be made to WEI fund investors from 30 January, not the 20 December date first indicated.
After the WEI fund was gated in June, its assets were divided into two in October, with BlackRock appointed to manage and sell the listed assets and use the proceeds to purchase money market funds and FTSE 100 index instruments.
Since its appointment, BlackRock has realised £1.9bn, Link said, representing 90% of the value of the listed portfolio and 63% of the total value of the fund.
Link said it was continuing to work with Park Hill, manager of the unlisted portfolio that represents around one third of the fund, “to explore opportunities for the sale of assets”.
Investors "treated poorly"
“This is the last thing trapped Woodford investors need and it looks like the date of the 20th was completely unrealistic in the first place,” said Adrian Lowcock, head of personal investing at Willis Owen.
“Throughout the whole process the investors have been treated poorly with little regard being paid to their personal situation or the fact that it is their money. The lack of clear explanations of the whole process and setting unrealistic goals shows a complete disregard for the most important people – the investors.”
Ryan Hughes, head of active portfolios at AJ Bell, agreed that investors will be disappointed by the delay of the initial payment, but said “ultimately it’s important the fund is wound up in the appropriate manner” and the BlackRock asset sales news was a positive.
With little hint as to the progress from Park Hill with the illiquid element of the portfolio, Hughes said “this may be an indication that these disposals are proving to be challenging” and that “investors should expect the liquidation process to continue for a considerable period”.
One adviser warned last year that WIE fund investors should prepare for "up to a 70% haircut" on their investments.
An update of the performance of the portfolio provided by Link showed the 1.23% gain from 15 October to 8 January, compared to a 6.2% improvement in the total return for the benchmark of the FTSE All Share index.
Prior to that, the WEI fund had plunged 14.9% from the early June gating to mid-October, while the FTSE All Share had risen 9.4%.
“Even in the wind up of the fund, investors have received no respite from the underperformance of the market, with the portfolio lagging by a further 5% since Woodford was removed as manager of the fund with the bulk of this underperformance coming from the illiquid parts of the portfolio having their value reduced,” said Hughes.
“Attention will now focus on the next communication on 28th January when investors will get their first indication of how much the initial payment will be.”
Subsequent to that, on 28 February, a quarterly income distribution payment is scheduled, with 17 March due to see another dividend for the period 1-17 January.