One year on Woodford’s fund is still in lockdown

THIS time last year, I was lucky enough to be walking the glorious trails that wind their way through the Tramuntana mountains in Majorca like rich seams of gold in rock.

I couldn’t have been happier – the sun on my back, tiredness in my legs, and at the end of the walk a drink in the pretty main square of Soller to look forward to. Not a care in the world and a welcome break on one of my favourite islands – a place I will not now probably get back to until next year.

Sadly, my walking trip was about to be disrupted – by news that Woodford Equity Income, a multi-billion pound investment fund popular with readers, had unexpectedly suspended dealings. Worryingly, investors couldn’t get their money out. They were effectively trapped – in investment lockdown.

I scurried back to Blighty and wrote that fund manager Neil Woodford and his investment operation Woodford Investment Management were finished.

Sadly, I was right. Today, Woodford Equity Income and Woodford Investment Management are no more, while Woodford himself is now living off the vast income that he made – both before and, indefensibly, after the fund’s suspension – from his investors whom he so badly misled and let down.

This Wednesday marks the anniversary of Equity Income’s suspension. Sufficient time, you would have thought, for a line to have been drawn under the affair and for everyone to have moved on. Yet we are nowhere near closure. The Woodford boil has yet to be lanced.

For a start, investors in Equity Income are still waiting to see if more of their losses will be covered by the sale of some of the remaining illiquid assets that Woodford inexplicably held in the fund. It’s a process overseen by private equity specialist PJT Park Hill and it’s proving trickier than a Rubik’s cube.

The assets are speculative investments that had no right to be in a fund marketed as a provider of income from a portfolio of equities.

Irrespective of the success of PJT Park Hill’s sales patter in offloading the assets, most Equity Income investors will end up having lost money from their Woodford experience.

Meanwhile, a number of legal firms are debating whether to launch class actions against those heavily involved in the Woodford debacle. Their targets include Woodford (of course) and Link, the fund supervisor that failed to supervise until it was too late. Also, Hargreaves Lansdown, which ridiculously labelled Equity Income a best-buy right up until its suspension, even though it had concerns over the fund’s growing exposure to illiquid assets, a ticking timebomb.

Even if one of these actions gets off the ground – and they are notoriously difficult to arrange – there is no guarantee that participants will win the compensation they deserve.

Yet it is the regulator’s role in this sorry affair that irks me the most. In the wake of Equity Income’s suspension, it launched an investigation into what had gone on, but it has yet to reveal to the world whether it intends to take any further action.

Maybe the Financial Conduct Authority is now directing all its firepower into ensuring financial services companies play fair as economic carnage threatens millions of households. And that would be understandable.

But at the very least, the regulator should be marking the anniversary of Woodford Equity Income’s suspension by telling former investors where it is with its work.

Has the investigation been suspended while it deals with lockdown-related financial issues? Fine.

HAS it been quietly dropped because it believes there is no case for any of the gang of three (Woodford, Hargreaves Lansdown and Link) to answer? An outrage if so.

Or is its investigation ongoing? Again, fine, but it should get its skates on.

Such an update is the bare minimum that former Woodford investors deserve from the regulator. But given the FCA was also culpable, by doing nothing while Neil Woodford turned Equity Income into an investment more toxic than some of the poisons used by villains in the TV Series Death In Paradise, I would be amazed if it makes any pronouncement before Wednesday.

Of course, I would love it to surprise me.