Woodford investors to lose another 43pc
INVESTORS trapped in Neil Woodford’s failed £3bn fund could lose as much as 43pc of any money they have left, according to a leaked report.
Research by private equity house PJT Park Hill, before it was appointed to help wind down Woodford’s Equity Income fund, said an extra £1.3bn could be wiped off its value as assets are sold.
Yet 59-year-old Woodford (pictured), who was fired from managing the fund last month, estimated he would have lost investors just 9.3pc more of their money had he been allowed to stay.
The beleaguered manager was summoned to the offices of Link Fund Solutions, which oversees the management of the Woodford funds, on October 14.
Knowing his job was in the balance, Woodford explained why he should remain at the helm of the Equity Income fund.
A slide from that presentation, seen by the Mail claimed that Woodford would have lost just 9.3pc of investors’ money in a worst-case scenario, if he managed to reposition the struggling portfolio, and if the hard-to-sell unlisted tech companies had their value written down to zero. But before he was even able to show that presentation, Link fired him on the spot.
Justin Modray, of Candid Financial Advice, said: ‘We’ll never know whether eventual losses would have been lower had Link not sacked Woodford, but since he is responsible for the mess investors find themselves in, it’s rather a moot point. He might enjoy more sympathy had he waived fund charges during the fund’s suspension.’
The losses – which both Woodford and PJT were estimating, though wildly different – come on top of the huge setbacks investors have already suffered.
Since the Equity Income fund’s £10.2bn peak in 2017, its value has tumbled more than 70pc as some investors pulled their cash out and several Woodford bets turned sour.
Since June, when the fund banned investors from pulling out their money, loyal customers have lost another 19pc of their pots.
Link commissioned the research from PJT – which was leaked to finance news website Citywire – when it was trying to decide if it should oust Woodford. PJT predicted investors would lose at least 32.5pc and up to 43pc of their money if Equity Income was liquidated and cash returned to backers. But since Link fired Woodford, appointing Blackrock and PJT to sell the assets slowly, losses could be lower than PJT initially estimated, the Mail understands. Link’s decision led to the downfall of the manager’s entire empire, Woodford Investment Management. The future of his smaller Income Focus fund, which has been frozen since mid-October and contains £249m of investors’ cash, is still in the balance. Link has shortlisted managers to take over the fund and it has not ruled out liquidating it. It said it acted in the best interests of investors to prevent a ‘fire sale’, and that the fund was being wound up to allow an ‘orderly realisation’ of its assets.