Woodford investors to receive first capital distribution

Payout will be around 70 per cent of current fund value


Investors in Neil Woodford’s suspended Equity Income fund will receive their first payout this week, according to Link, the fund administrator.

The fund, which was formerly managed by former star manager Woodford, was suspended in June 2019 with investors unable to sell their holdings.

While the winding up of the fund has begun, this first payment is equivalent to just over 70 per cent of the current fund value.

The cash has been raised from the sale of the more liquid investments held in the portfolio. However, there are still a large number of illiquid or unquoted investments which have not yet been sold.

“All investors will receive notification today, January 28, 2020, of the amount they will receive in relation to their holding(s) in the fund,” Link said in a letter to investors.

“This first capital distribution will be paid to your nominated bank account on or around January 30, 2020. If you hold the investment through a fund platform you may receive your payment a few days after January 30 due to the time it may take for your platform to process your payment.”

This first capital distribution will be reflected in the net asset value of the fund on the payment date, being on or around January 30, 2020, the administrator said.

“This means that the number of shares that you hold in the fund will remain the same but the price per share will reduce to reflect the value paid out by way of the first capital distribution of the fund on that date.”

Ryan Hughes, head of active portfolios at AJ Bell said: “In some respects, today represents the first day of closure for investors who have suffered from the terrible performance of the Woodford Equity Income fund. However, while this payment of the first tranche of the liquidated assets will be a relief for thousands of investors who have been trapped in the fund since June last year, there is still huge uncertainty around the money still stuck in illiquid assets.

“This payment represents just over 70 per cent of the current fund value and has been raised from the sale of the liquid element of the portfolio. Investors will be acutely aware that a large portion of their investment remains trapped in the illiquid, unquoted holdings that Park Hill are trying to sell. Selling the liquid holdings was the easy bit. It is a hugely challenging task to sell the illiquid holdings in a timely fashion and investors still remain in the dark as to how long they will have to wait for the remainder of their money and, importantly, how much they are actually likely to get back.”

FURTHER READING: Fund closures set to hit investor confidence

FURTHER READING: Neil Woodford quits his funds: what does this mean for investors?

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