Woodford payouts: what the experts think
● Glass half-empty
When the former star fund-manager Neil Woodford crashed last year, his flagship fund was frozen. This week, pension funds and some 300,000 private investors in the £2.9bn Woodford Equity Income fund learnt how much of their money they are getting back, said Patrick Collinson in The Guardian. In a nutshell: about half. After selling a first tranche of the fund’s assets, administrator Link Asset Services confirmed it would make “an initial payout of just 48p-58p a share – compared with the 100p price at launch five years ago. The money comes mainly from the sale of “liquid” easier-to-sell assets: mostly shares in quoted companies. A second distribution will follow the disposal of “unquoted investments”. Don’t hold your breath. “The administrators have already warned that these assets are proving more difficult to sell than expected.”
● Lethal combo
The drastic fall in the value of Woodford shares contrasts sharply with the typical 31% gain in average equity income funds over the past five years, underlining “the calamitous failure of Woodford’s stockpicking”. Duff investments included estate agent Purplebricks, finance firm Burford and the doorstep lender Provident Financial. “We have no desire to engage in... an unseemly exercise in schadenfreude”, noted rival fund superstar Terry Smith of Fundsmith – before putting the boot into the “lethal combination” of Woodford’s model: “a daily dealing open-ended fund with significant holdings in unquoted companies and large stakes in small quoted companies [with] very limited liquidity”.
● Getting your own back
The scale of losses felt by investors depends on when they bought into the fund and “which investment platform they used”, said Sam Benstead in The Daily Telegraph. If you bought through a “fund supermarket” – such as AJ Bell or Hargreaves Lansdown – and want to complain, your first port of call is to contact them; they may direct you to the (free) Financial Ombudsman Service. If you invested directly in Woodford, contact Link, the administrator. “Legal action is also an option.” Some 3,500 investors have signed up with law firm Slater and Gordon to launch a case against the failed fund manager. According to the firm “it is too early to say” what may be achieved.