Woodford Equity Income Fund investors have been told they will receive almost 75% of the fund’s current value in the first distribution payment under its wind down, but uncertainty remains over how long it will take for the illiquid part of the portfolio to be liquidated.
Link Fund Solutions informed investors today that the first payment would represent between 46.3633p and 58.9936p per unit depending on which of the nine share classes they hold. The mid price on the fund is currently 79.14p.
The first payment will be received on 30 January, or a couple of days later if the fund is held via a platform.
The final valuation for the fund value ahead of the wind-down period occurred on 17 January cementing Neil Woodford’s biggest ever maximum drawdown of his career. Investors who backed the fund in June 2017 and failed to sell out before its suspension are nursing a 41.7% loss compared with the FTSE All Share’s gain of 14.1%, Morningstar data shows.
‘Selling the liquid holdings was the easy bit’
AJ Bell head of active portfolios Ryan Hughes said while payment from the first tranche of liquidated assets will be a relief for trapped investors a huge amount of uncertainty remains about the remainder of the portfolio still to be sold.
“Selling the liquid holdings was the easy bit,” Hughes said. “For Park Hill, it is a hugely challenging task to sell the illiquid holdings in a timely fashion and investors still remain in the dark as to how long they will have to wait for the remainder of their money, and importantly, how much they are actually likely to get back.”
In its last update to investors on 10 January, Link revealed 63% of the portfolio had been liquidated.
The ACD was mum on progress in the illiquid portfolio, being sold down by PJT, but said 90% of the liquid portfolio, for which Blackrock has responsibility, had been sold representing £1.9bn.
Investors in the dark about future distributions
Portfolio Adviser asked Link Fund Solutions how many more tranches are to come and the timeline for the wind down of the portfolio. The authorised corporate director did not have a response but said investors would be receiving a more detailed letter about the the wind down on Wednesday.
Link Fund Solutions is likely to avoid making too many small payments due to the costs involved, said Willis Owen head of personal investing Adrian Lowcock.
“There are not so many precedents of funds winding up but there are plenty of examples of companies being wound up and there are usually a number of distributions over quite a long period of time, but the costs of winding up businesses are also high so the comparisons are not the same,” Lowcock added.
