Savers race to get £258m back as administrators suspend SECOND fund run by shamed investment guru Neil Woodford after he quits as its manager
- Neil Woodford’s £3billion Equity Income fund confirms it will be wound down
- And now his smaller £253 million Income Focus Fund has been suspended
- Disgraced financier was sacked from main firm after months of chaos
- A third fund, Woodford Patient Capital trust – a listed business – remains open
Another fund run by disgraced financier Neil Woodford was suspended today as investors – many of whom used their life savings – rushed to pull out up to £258million in cash.
Link Fund Solutions, which administers the Woodford Income Focus Fund, said the move was made to protect those with cash invested as its value plunged from £500million since April.
Hundreds of thousands of investors are already facing huge losses after the investment empire run by disgraced fund manager Woodford crumbled to dust last night as it emerged his flagship £3billion Woodford Equity Income fund will be wound down.
And now shares in a second smaller fund – the Woodford Income Focus Fund – have also been suspended from dealing amid a rush to pull out investor money.
In the letter to investors, Link said: ‘During the fund’s suspension we will consider the options available to us, including the appointment of an alternate investment manager, a scheme of arrangement into another fund or a winding-up of the fund, and decide on the course of action that is in the best interests of all investors.’
Legions of people who entrusted their life savings to Britain’s most feted stock-picker suffered a crushing blow yesterday as they learned his flagship £3billion Woodford Equity Income fund will be wound down
A third fund, Woodford Patient Capital trust – a listed business – remains open for trading, but shares have been badly affected and were down another five per cent today.
Link Fund Solutions, which administers the fund, said the move was made to protect investors.
What is the status of Neil Woodford’s three investment funds
£3billion Woodford Equity Income fund: Being wound down
£256million Woodford Income Focus Fund: Suspended
£800million Woodford Patient Capital trust: Open
It follows Mr Woodford’s decision late on Tuesday to quit as manager of the fund and close down his investment management business after he was sacked from his flagship £3billion Woodford Equity Income Fund, which will now be wound up.
The equity income fund had been frozen since June, locking thousands of investors out of their cash and plunging Mr Woodford’s investment empire into crisis.
Link said it is looking at the possibility of appointing an alternative investment manager for the income focus fund, but is also considering winding it up.
In a letter to investors, Link said: ‘After consideration of all relevant circumstances relating to the fund’s assets, we have come to the conclusion that it is in the best interests of all investors in the fund to suspend the issue, cancellation, sale and redemption of shares in the fund.
‘The period of suspension is intended to protect investors from this anticipated increased level of redemptions in the fund.’
It added that as a ‘forced seller’ of its assets, it may not achieve the best value, which could impact on shares for investors remaining in the fund.
The income focus fund, launched in March 2017, has seen its assets under management more than halve over the past six months – down to £258 million from £552.5 million at the end of April.
Most of this has been down to an investor exodus, as well as poor performance.
Its holdings are quoted, which means they are likely to be easier to sell than assets held in the equity income fund, but it does have exposure to medium-sized and smaller companies, which can be hard to sell out of.
The demise of the Woodford equity income fund marked the end of Mr Woodford’s investment management business – and his career as a star stockpicker.
He said on Tuesday he would close down his business, which was founded in 2015 after more than 25 years at Invesco Perpetual
The income focus fund is the smallest of three funds that were run by Woodford Investment Management.
Legions of people who entrusted their life savings to Britain’s most feted stock-picker suffered a crushing blow yesterday as they learned his flagship £3billion Woodford Equity Income fund will be wound down.
Savers had been locked out of Equity Income since June 3 after increasing numbers of investors pulled out their money amid concerns over Mr Woodford’s flagging performance.
He froze the fund to give himself time to sell shares so he could meet the demand for withdrawals – and it had been expected to reopen it December – but it has become increasingly clear that would not happen.
And after being fired from that main fund, Mr Woodford last night dramatically quit the other two funds which bear his name – Patient Capital Trust and Income Focus. This twist followed an evening board meeting in which he was expected to be sacked anyway.
Savers who invested when the fund was at its peak in June 2017 have already seen 40 per cent wiped off their nest eggs, meaning a £10,000 investment would now be worth about £6,000. They were warned last night they will get significantly less as the costs of winding up the fund and selling its assets are deducted.
As savers who trusted Mr Woodford face an agonising wait to see what is left, MPs hit out at the veteran fund manager for raking in £63million from his doomed investment empire over the past four years despite his poor performance.
There was also condemnation for the £8.8million in fees that his Oxford-based firm, Woodford Investment Management, has taken from helpless investors in just over four months since banning withdrawals from Equity Income.
Campaigners said his fall from grace – after a hugely successful career as a stock-picker at US giant Invesco – has highlighted the ‘wildly excessive fees’ charged by supposedly ‘superstar’ fund managers.
In a statement last night, Mr Woodford, whose main home is a £13.7million mansion in Gloucestershire, said: ‘We have taken the highly painful decision to close Woodford Investment Management. I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management.’
Last night, Baroness Altmann, a former pensions minister, said the huge fees generated by Mr Woodford’s company ‘add insult to injury’ for savers and described the 59-year-old’s downfall as a ‘wake up call for regulators’ to provide better protection for investors.
‘I’m glad he’s been sacked but it should have happened sooner’
Richard Batchelor has little confidence he will get much of his £2,000 investment back and has accused fund manager Neil Woodford of being ‘arrogant and unsympathetic’.
The former printing company owner, 66, and his wife Kitrina, 67, had about £300,000 in a personal retirement plan, and about £2,000 of this was invested in Equity Income in 2010, on the recommendation of his then-financial adviser.
Mr Batchelor, who lives in Ferndown, Dorset, welcomed the news Mr Woodford had been sacked as fund manager. The father-of-two said: ‘Neil Woodford has been very arrogant and unsympathetic throughout this whole process. I am glad he has been sacked but it should have happened a lot sooner.
‘He’s lost all credibility. I would never again put money into anything which has even been associated with Neil Woodford.’
Gabriel Herbert, a financial services worker, had around £18,000 invested in Equity Income, but withdrew £8,000 on the advice of colleagues shortly before it was suspended in June.
Miss Herbert, 64, from London, said: ‘This was a fund where ordinary people invested money. I invested as soon as it opened, mainly because Hargreaves Lansdown was promoting it so much and hailing Woodford as a star investor. It should have been suspended and wound up before it lost as much money as it did.’
Equity Income savers face waiting up to a year to get back what is left of their investments as the fund is wound down and all its assets in various companies are sold off.
At its peak the fund was worth £10.2billion, which has now fallen to around £3billion. It has lost around £700million since the lock-in period was imposed to give Mr Woodford enough time to dispose of shares he had bought in difficult-to-sell assets, such as obscure companies which are not listed on the stock exchange.
Fund supervisor Link Fund Solutions said last night the assets would be sold by American investment firms Blackrock and Park Hill, and insisted this would lead to a ‘better outcome for investors’ than reopening the fund and risking a flood of demands for repayment.
Mr Woodford, once described as the ‘man who can’t stop making money’, remained defiant last night, saying: ‘This was Link’s decision and one I cannot accept, nor believe is in the long-term interests of Woodford Equity Income fund investors.’
But in a final insult, investors were told they would not be refunded the £8.8million in fees that have been deducted since the fund was frozen in June.
Last night MPs urged Mr Woodford to hand back some of the millions he has earned to his investors.
Frank Field, chairman of the Commons work and pensions committee, said: ‘It would be a good move to put this money back into the fund, so that those who invested in good faith will suffer smaller cuts to their savings.’
Luke Hildyard, executive director of the High Pay Centre think-tank, said: ‘The asset management industry charges wildly excessive fees to savers and pension funds in order to pay supposed superstar managers.’
Yesterday Bank of England governor Mark Carney told MPs on the Treasury committee the Woodford saga showed the need for reforms to protect investors.
An investigation has been launched by the City watchdog, the Financial Conduct Authority, into the events leading to Equity Income’s suspension.
RUTH SUNDERLAND on the arrogance of City outsider Neil Woodford who lost his golden touch and then saw his financial empire turn to rubble
Neil Woodford, who last night suffered the ultimate humiliation of seeing his financial empire collapse, was once the most acclaimed investment guru in Britain with a Pied Piper following among small investors.
But, as anyone who has met him will testify, the downfall of the 59-year-old is due to fatal flaws in his character. Greed, naturally – it comes with the territory – but above all arrogance.
Even now, Woodford’s self-belief is so unshakeable he says he cannot accept the decision to close down his flagship fund. Unbelievable though it may seem, he still believes he could have traded his way out of trouble.
The shaven-headed money man has the build of a scrum half and the dress sense of a Mondeo-driving golf-club habitue, favouring chinos and jumpers rather than a suit. Woodford is also an enthusiastic rider
This is a man who has such faith in his own abilities he thinks that when his investments go down, it means the market, not him, is wrong.
It is a vertiginous fall for a man who seemed to have a genius for making money.
His followers were attracted by an impeccable track record: in his previous job, he helped small investors turn a typical £10,000 investment into a stupendous £230,000 over 20 years.
So it is not surprising thousands entrusted him with their life savings when he set up his own firm, Woodford Investment Management, which is now being wound down.
Those savers stand to lose most of their money and Woodford is a City pariah whose name goes into the annals of shame along with the likes of Sir Philip Green and Fred Goodwin.
The shaven-headed money man has the build of a scrum half and the dress sense of a Mondeo-driving golf-club habitue, favouring chinos and jumpers rather than a suit.
Unlike his disillusioned investors, he can console himself with the many millions he has extracted along the way.
He lives with his blonde wife Madelaine and their two children in a huge farm in the Cotswolds, near Highgrove House, the country home of the Prince of Wales.
He lives with his blonde wife Madelaine and their two children in a huge farm in the Cotswolds, near Highgrove House, the country home of the Prince of Wales. The Woodfords also have a second luxury home on the Devon coast (pictured centre)
From there, he commuted to his office on an industrial estate outside Oxford by Porsche – or one of his other cars which also include an Audi – at the crack of dawn each morning.
Enviably, Chez Woodford boasts a huge equestrian complex for their horses: his hobby is amateur three-day eventing.His enthusiasm for all things horsey was acquired when he took up with Madelaine, 47, his former secretary who became the second Mrs Woodford. He and his first wife, Jo, did not have children.
The Woodfords also have a second luxury home on the Devon coast.
The couple paid cash for the £6.35million six-bedroom property two years ago.
Quite a lifestyle for a man who has always felt himself to be an outsider among the Eton and Oxbridge-educated fund management types who infest the City. He is a grammar school boy from Berkshire from a relatively modest background, who studied agricultural economics at Exeter University.
His father Victor printed postcards for a living.
In happier times, that did not prevent Woodford from being what seemed like a stock-picking genius.
He spent most of his career at fund giant Invesco, where his stellar track record meant that when he left in 2014 to set up his own firm, he raised £1.7billion in just a fortnight.
Those close to him say the move to shut down his main fund came as something of a surprise, which is an indication, perhaps of wilful blindness to the level of anger aimed at him.
Yet the last time I saw Woodford, he claimed that when he looks at himself in the mirror in the morning he doesn’t see an investment legend, but all his human frailties.
With his business and his reputation in ruins, he certainly has a lot to reflect upon today.
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