JEFF PRESTRIDGE: Woodford will eventually pay his investors back… when I walk on the moon
Another month, yet another kick in the teeth for investors who trusted one of the country’s investment stars of the early 2000s to look after their money – only to be let down spectacularly.
That’s how it seems to most of the 300,000 investors who for the past 16 months have been waiting patiently to extricate themselves from failed investment fund Woodford Equity Income, until last year run by Neil Woodford, every investment adviser’s blue-eyed boy.
When Woodford’s £3.7billion fund was abruptly closed in June last year after it could not meet a multi-million pound redemption request from a local council, it was awash with illiquid investments that should never have been held as part of an income-oriented portfolio – indeed, should never have been part of any investment fund.
‘There’s more chance of me walking on the moon than investors getting back their share of £288million. Mark my words, it will be much less’, says Jeff Prestridge
Woodford was fired from the fund last October (but not before taking millions of pounds in fees) and Equity Income has since been gutted – but it’s a drawn-out, messy and expensive process, much to the infuriation of investors.
The gutting has been overseen by Link Fund Solutions, an organisation that has hardly covered itself in glory given its role at Woodford Equity Income, from the day the fund launched in 2014, was to ensure it ran in the best interests of investors.
Link failed its duties as shockingly as Mr Woodford did with his stock picking. A few days ago, Link updated investors on the winding-up of the fund as well as publishing fund accounts for the 15 months to the end of March this year.
For investors it made depressing reading, although I can’t imagine that many managed to fight their way through all 70 pages of bewildering financial numbers without reaching for a box of Nurofen Maximum.
What investors would have discover if they lasted the course would have made their blood curdle. Some £288million of the fund’s assets have still to be disposed of, presumably because nobody wants to buy them.
Indeed, Link says it may take until ‘mid to late’ next year before they are sold. If so, that would mean at least a two-year wait for investors to finally be rid of Woodford Equity Income. Unacceptable.
Also, there’s more chance of me walking on the moon than investors getting back their share of £288million. Mark my words, it will be much less.
The fees that have been taken from the fund during its dismemberment – reducing cash payouts to investors – are mind-boggling. Asset manager BlackRock, employed to sell Equity Income’s tradeable assets, took more than £11million in fees – an ‘outrageous’ sum according to one investor who said ‘his accountant could have done the same job for a fraction of the price’.
Investment bank PJT Park Hill has so far earned more than £3million from offloading some of the more illiquid assets while lawyers have jumped on board the gravy train with fees of £2.5 million.
No wonder investors are boiling with rage. ‘This financial debacle will not go away until justice is served,’ said one last week.
Absolutely right. But for that to happen, we either need the regulator to step up to the mark (fat chance) or for lawyers to mount a class action (50:50). Waiting for Godot springs to mind.