Woodford investors are warned they may only get third of their cash back
LONG-SUFFERING savers who invested in Neil Woodford’s flagship fund face heavy losses this week when they finally begin to get their money back.
More than 300,000 investors have been denied access to their cash since the toxic Woodford Equity Income Fund was suspended last June.
They will start getting their money back tomorrow, following the appointment of new managers to wind up the fund last year.
But they will receive far less than they put in. Fund administrators said savers will get between 46.4p and 59p per unit. The payout will depend on what kind of units the investor bought and which platform or broker they invested through.
Anyone who ploughed £10,000 of their savings into Woodford Equity Income at its launch at 100p per unit in 2014 will receive as little as £4,640 tomorrow.
And someone who put in the same amount when the fund hit its peak in June 2017 could see just £3,322 returned. There should be more to come as the fund’s new managers – Blackrock and PJT Park Hill – sell the rest of the stocks held in Equity Income.
But this week’s refund is likely to be the lion’s share of what they will receive.
One Woodford investor, a 72year-old former engineer from Cardiff who did not want to be named, has been desperate to withdraw his money from the fund. He had his life’s savings, around £28,000, tied up in Woodford Equity Income, but suffers from asbestosis and cancer and was using that money to pay for his care and help around the house.
Since the fund went into lockdown last June, he became unable to afford his cleaner and was growing anxious about how he would be able to pay for vital home help if his condition deteriorated.
‘Now I rely on the State to look after me,’ he said. ‘The money I’ve lost is something I can’t regain. I haven’t got time to reinvest what I get back, to make back the losses, as I’m going to have to use it straight away.’
The Woodford Equity Income Fund was suspended in June after a run of poor performance caused several investors to try to pull their money out.
But Mr Woodford, 59, had invested a significant proportion of the fund in riskier, unlisted stocks which are harder to sell in a rush. Link Fund Solutions, which oversees the management of the £3.2billion fund, decided to suspend it to prevent more people withdrawing their money and forcing him into a fire-sale of the assets.
In October, it fired him from running the fund, but Mr Woodford managed to rake in £8million in fees during those five months from investors trapped in the fund, saying he needed the money to cover expenses.
Since launching the Woodford Investment Management business in 2014, he and his business partner Craig Newman have together bagged £111.8million in profits and dividends.
At the fund’s current price, the amount savers receive tomorrow will be about 74 per cent of the total they can expect back.
But investors cannot count on reclaiming all of the remaining 26 per cent, because this depends on Blackrock and PJT Park Hill being able to sell the rest of the stocks in the fund at a good price.
‘I can’t make back the losses’