Neil Woodford has been booted from his flagship Equity Income strategy with the fund to wind down under transition managers Blackrock and PJT Partners.
Link Fund Services, authorised corporate director, confirmed the move in a letter to unitholders on Tuesday morning.
Woodford has been removed immediately and the fund will become LF Equity Income. Link will not charge fees during the wind down.
Blackrock will oversee the wind-down of a portfolio of listed holdings while PJT Partners will focus on unquoted holdings.
The removal of the UK’s most renowned fund manager from his own flagship fund has been described as “truly shocking news” by Willis Owen head of personal investing Adrian Lowcock, who said the collapse of the fund was on par with the implosion of New Star.
“We have seen the complete demise of the most famous fund manager the UK has seen for years.”
Future of Woodford in jeopardy
At £2.9bn, Woodford Equity Income was the largest fund in the Woodford Investment Management stable, although it is a far cry from the £10.7bn it held at its peak.
Tilney managing director Jason Hollands said the future of the Oxfordshire boutique is in “serious doubt” after the collapse of Equity Income.
“Without it there is little left: The Board of Woodford Patient Capital Trust have already acknowledged they are talking to potential alternative managers and the Woodford Income Focus fund has shrunk to a size that would unlikely be commercially viable as a solo product for a stand-alone business.”
The wind up will add more pressure to the Patient Capital Trust board to find a new manager or shutter the closed-ended fund.
Shore Financial Planning director Ben Yearsley points out WIM isn’t earning a fee from the investment trust. “This feels like the end for Woodford as a stand-alone business.”
Regulator under the microscope
The collapse of the fund will also shine a spotlight on the Financial Conduct Authority, said AJ Bell head of active portfolios Ryan Hughes.
“For the Woodford debacle to have any positive outcome it must now serve as a catalyst for the FCA to speed up its review of illiquid assets held in Ucits funds,” Hughes said.
Yearsley said unquoteds should not feature in open-ended funds.
“The FCA should now look at this and go further than they went recently to ensure this can’t happen again and essentially outlaw unlisted holdings from the open ended fund structure,” he said.
