Neil Woodford’s flagship fund will be liquidated and the embattled fund manager has been ousted.
The fund’s administrator Link Fund Solutions hired BlackRock Advisers to prepare the portfolio for the winding down process, according to a statement on Tuesday. Mr Woodford ceases to be the fund manager with immediate effect, marking the latest chapter in what’s been a dramatic reversal for the former UK star stock picker.
“After careful review of the fund and its holdings we have decided not to re-open the fund and instead to wind it up,” Link wrote in a letter to investors. “We recognize that this will come as a disappointment to some investors.”
Mr Woodford built his reputation at London-based Invesco Perpetual, where he worked for more than 20 years. When he left to set up his own company in 2014, many investors followed. St. James's Place, a manager of client savings and pensions, pledged £3.7 billion of its clients' assets invested with Invesco and parked it in Mr Woodford's new funds before the company was formed.
Mr Woodford had built up a reputation by correctly calling major swings in technology, tobacco and other stocks over decades. The stock picker, after starting his eponymous investment firm, shifted the focus of his flagship fund from large-cap equities, to smaller companies.
By June this year the fund included an almost 97 per cent allocation to micro-, small- and mid-cap stocks at the end of May. That was up from 40 per cent in January 2016. In his first year on his own, Mr Woodford’s Equity Income fund gained 16 per cent, beating all 50 of its peers tracked by Bloomberg. But over the last three years he was in the bottom percentile.
The UK regulator said it welcomes the removal of uncertainty following the decision.
"Winding-up the fund will allow the return of money to investors through a number of distributions, likely to begin in January 2020," according to a statement from the Financial Conduct Authority. "This means investors should receive some of their money back sooner than had the fund remained suspended for a longer period."
The FCA has an open investigation into the activities that led to the suspension of the fund. – Bloomberg
