FINAL SHAME OF WOODFORD

Fired fund chief walks off with a fortune as savers face huge losses

HUNDREDS of thousands of investors are facing huge losses after the investment empire run by disgraced fund manager Neil Woodford crumbled to dust last night.

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 stockpicker 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.

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.

‘A wake up call for regulators’