Raking it in from savers’ misery

We reveal Neil Woodford’s huge profit margins as the discredited fund manager is STILL...

FURIOUS savers have accused Neil Woodford of getting rich off their misery – amid fears he is still raking in bumper profits at his toxic Equity Income fund.

The Mail can reveal that last year, 53p in every £1 which his company earned as fees ended up as profit.

And investors stuck in his Equity Income fund are still being charged fees of nearly £100,000 every working day, even though they cannot get their money out because withdrawals were blocked last month.

Woodford has insisted this cash is essential to cover running costs, and refused to disclose his profit margin.

Richard Batchelor, a retired owner of a printing company who has £2,000 invested in Woodford’s Equity Income fund, said: ‘I think he’s being totally arrogant about the whole situation.

‘I had always encouraged my children to save into pensions. But with situations like this, it’s no wonder young people aren’t saving.’

In the year to March 2018, the manager’s firm Woodford Investment Management collected more than £78m in fees. After deducting costs, such as staff salaries and trading and marketing expenses, the firm still booked a £41.7m profit, giving it a margin of 53pc.

Much of this went into the pockets of Woodford, 59, and his chief executive Craig Newman, 48, who jointly own Woodford Investment Management. They took a dividend of £36.5m.

Another investor, who did not want to be named but invested £12,000 in the fund when it launched in 2014, said it was ‘disgusting’ that Woodford was still charging investors while refusing to show how their money was being put to work.

The investor added: ‘The fact that he’s bringing in thousands per day when we can’t get money out is obscene. I feel like he’s throwing us to the wolves. I think he should be fully transparent, bearing in mind the mess that little investors like me are in.’

Several savers have had to cancel major holidays, celebrations or home renovations because their money is locked in Woodford’s fund.

Woodford – who owns a luxury six-bedroom home in the Devon resort of Salcombe – has made around £2.4m in fees since Equity Income was shut, and has insisted that he still needs the money to cover essential costs.

He is selling a string of risky stocks and putting the money into bigger firms such as those in the FTSE350 – a process which could take months.

Just this week he was forced to make several support staff at his firm redundant.

A Woodford spokesman said: ‘The annual management charge, paid to Woodford Investment Management, covers a wide range of costs associated with running an actively managed fund. This includes the fund management, infrastructure, staff, resource and administration costs.’

Woodford is also understood to have ploughed the vast majority of money he earned in dividends back into his own funds.

In a letter to the Treasury Select Committee chairman Nicky Morgan, Andrew Bailey, head of the Financial Conduct Authority, said it was down to Woodford alone to decide whether to waive fees.

Hargreaves Lansdown, the investment platform which recommended Woodford’s Equity Income fund on its Wealth 50 best-buy list right up until it was suspended, agreed to forego its own fees for investors in the fund as a gesture of goodwill. Hargreaves’s boss Chris Hill has also given up his bonus of up to £2.1m per year due to the fallout from the Woodford dilemma.

Experts believe that Woodford Equity Income could be suspended for up to six months, by which time he will have made several million pounds in management fees.

Meanwhile, savers in his other funds have also suffered. His smaller Income Focus fund has almost halved in size over a few weeks due to a combination of investors pulling their money out and the value of his investments falling. Shares in the Woodford Patient Capital trust have tumbled more than 26pc since the beginning of June. They ended yesterday up 0.3pc, or 0.2p, at 57.5p.