viewWoodford Investment Management

Investors in Woodford gated fund to receive next distributions this month

“The amount you receive will be calculated on 18 March 2020 and paid to you on or around 25 March 2020”

Neil Woodford
After Neil Woodford was fired from the fund it was renamed LF Equity Income Fund

Investors in Neil Woodford’s collapsed Equity Income fund will receive a smaller second cash distribution after further assets were sold as part of the winding-up process.

Two more payments will be made this month after administrators generated another £141.7mln from asset sales from the frozen fund, which was shuttered last June when a rush of redemptions followed a period of poor performance and criticism of the investment policy.

READ: Law firms probe Hargreaves Lansdown as part of Woodford challenge

These latest sales are equivalent to 19.9% of the value of the unit trust’s assets as of 10 March.

In January, investors received their share of £1.9bn realised from sales of more liquid assets.

As the liquid assets have already been sold, it suggests that there has been some success in selling some of the illiquid assets, said Ryan Hughes, head of active portfolios at AJ Bell.

“This shows a glimmer of hope as previously there had been no sales from this chunk of the portfolio,” he said. 

“However, this distribution only represents 20% of the remaining assets, so there’s still a long way to go. What’s more, we’ve seen market conditions deteriorate considerably, meaning that selling any unlisted and illiquid assets is likely to become much harder... While the asset manager will balance the competing needs to sell assets at a good price versus the saga dragging on for years, it seems inevitable that this will rumble on into 2021.”

Following a quarterly income distribution payment in February and another to be calculated and paid on 17 March, it will mean £2.3bn will have been paid back to shareholders by the end of the month, according to supervisor Link Fund Solutions, with the amount to be calculated on 18 March and paid on or around 25 March.

Link admitted it could not give an indication about future payouts as selling the less liquid assets in the portfolio “may take longer than was the case for the sales to date”, with further capital distributions to be made “as and when suitable amounts of cash have been raised”.

Two law firms said last month they have been contacted by thousands of investors in the fund who are seeking compensation, piqued by the excessively high proportion of illiquid assets that Woodford had loaded onto the portfolio.

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