Here are some extracts from the FCA’s Woodford Equity Income Fund FAQ (full answers here), following the decision to shut down the stock picker’s increasingly-stricken equity fund:
Why did the fund suspension happen?
On 3 June 2019, Link Fund Solutions decided to suspend dealings in the WEIF in order to protect all investors in the fund following an increased level of redemptions.
Why is the WEIF being wound up?
Whilst progress has been made in relation to repositioning the WEIF and disposing of its less easily sold assets, this has not been sufficient to provide reasonable assurance that the repositioning would be fully achieved and the WEIF could be re-opened in December. Because sufficient progress was not made, LFS has decided it is in the best interests of all investors to seek to wind-up the WEIF rather than continue to reopen the fund.
What does this mean if I’m an investor in the WEIF?
A fund winding-up means it will close and money will be returned to you. Returning money takes place in instalments as the assets in the fund are sold. LFS expects to make these as soon as possible once the formal winding-up begins, which is expected to commence in mid-January, because three months’ notice needs to be given to investors under the rules implementing the applicable European Directive.
What are the arrangements for the management of the fund’s assets?
LFS remains the authorised corporate director of the WEIF. This means it will be responsible for the orderly winding-up of the fund.
Who will return my money to me?
You should receive money from any intermediary through which you invested in the fund (e.g. a platform provider or an adviser), or LFS directly.
How much of my money will I get back?
The amount you will receive will depend on the fund’s value and the amount raised by selling the fund’s assets. The fund’s value fluctuates in line with the market values of its underlying assets. If assets are sold for lower prices, you will receive less from the winding-up process and this also may be less than you originally invested.
FCA on Woodford: We welcome ‘the removal of uncertainty’
The Financial Conduct Authority, the City watchdog, has also responded to Link’s decision, which it is welcomed. The regulator said:
The FCA welcomes the removal of uncertainty that LFS’s decision provides. We recognise that investors have been concerned about the state of their investment since the beginning of June. Winding-up the fund will allow the return of money to investors through a number of distributions, likely to begin in January 2020. This means investors should receive some of their money back sooner than had the fund remained suspended for a longer period.
- The FCA has released a Q&A for investors on its website, which be be read here.
Woodford Patient Capital Trust board: Further announcement ‘in due course’
The board of Woodford Patient Capital Trust has released a statement following Link’s decision to wind down Woodford Equity Income, formerly the fallen star trader’s flagship fund. They say:
The Board of Woodford Patient Capital Trust plc notes the statement by Link Fund Solutions Limited, the Authorised Corporate Director of the LF Woodford Equity Income Fund, that: (i) the decision has been taken by LFS not to re-open WEIF and instead to wind it up as soon as practicable; and (ii) Woodford Investment Management Limited will, with immediate effect, cease to be the investment manager of WEIF.
As previously announced, the Board has been undertaking a review of the Company’s management arrangements and will make a further announcement in due course.
Here’s how Woodford Equity Income, the fund being wrapped up today, was performing as of July:
Pound leaps after Michael Barnier says Brexit deal is ‘possible’
The pound jumped this morning after EU Chief Brexit Negotiator said an agreement over Brexit could be possible this week. Before a meeting of European ministers, he said:
Even if an agreement has been difficult, more and more difficult, it’s still possible this week.
Reaching an agreement is still possible. Obviously, any agreement must work for all. The whole of the UK and the whole of the EU. Let me add also that it is high time to turn good intentions in a legal text.
Woodford fund ‘to be wound up’
The suspended Woodford Equity Income Fund will be closed by its administrator, according to an emailed statement on Tuesday.
Following the decision to wind up the fund, founder Neil Woodford will cease to be the investment manager with immediate effect, according to Link Fund Solutions. The administrator has hired Blackrock Advisers.
The fund’s administrator Link Fund Solutions hired BlackRock Advisers to prepare the portfolio for the winding down process, according to an emailed statement on Tuesday. The former star stock picker ceases to be the fund manager with immediate effect.
“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.”
The move marks the latest chapter in what’s been a dramatic reversal for the former U.K fund manager. Woodford built up a reputation by correctly calling major swings in technology, tobacco and other stocks over decades. Plagued by years of poor performance and mounting redemption requests, his fund administrator froze redemptions in the LF Woodford Equity Income Fund in June.
Since the suspension, Woodford has been offloading small stakes in the fund in to a cohort of investors in a series of fire sales.
Agenda: Markets febrile after day of wobbles
Yesterday, stock markets across Europe closed in the red, though what temporarily appeared to a session of steep losses improved somewhat after signals from Beijing were judged to be more favourable than had first been thought.
Nonetheless, the mood was risk-off, with miners suffering in particular, while safe-haven assets such as gold and the US dollar strengthened. All eyes will now turn to whether there will be a Brexit deal for leaders to sign at Thursday’s EU Summit.
5 things to start your day
1) The bailed-out Royal Bank of Scotland was forced to develop its own digital bank after the failure of an audacious attempt to buy online lender Monzo. Senior executives from the taxpayer-controlled lender approached Monzo for talks before baulking at the price tag.
2) Think Tank: three charts that give BoJo a boost for a Brexit general election. One of these is the misery index which is running at less than 6pc, less than half the level seen in the early austerity years of the decade and around the same as 2015 when the Conservatives won a shock overall majority under David Cameron.
3) Barnardo’s boss:Charity shops are saving the high street, not hurting it. At Barnardo’s most exclusive outlet in Marylebone, high fashion hand-me-downs are the norm – and a few wealthy donors help to deliver a healthy £200,000 annual profit.
4) The official launch of Facebook’s new cryptocurrency alliance was overshadowed on Monday by the abrupt departure of Booking.com, leaving the project with just 21 of its original 28 backers. Booking Holdings, which controls 41pc of the online travel market through services including Kayak and Agoda, confirmed on Monday that it had dropped out on the very same day that it was supposed officially sign up to the project at a meeting in Geneva.
5) The founder of Hargreaves Lansdown has accused the firm of failing in its duty to shareholders amid a row about political donations. Peter Hargreaves fell out with the investment platform last week over a planned shareholder vote on making donations to political parties. The 73-year-old billionaire made it clear he would use his 32pc stake to oppose the motion, so Hargreaves Lansdown cancelled the ballot at the last minute before its annual meeting.
What happened overnight
Asian stocks and Wall Street futures inched higher on Tuesday as some investors held out hope that Britain still had a chance to avoid a messy exit from the European Union at key negotiations this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1%. South Korean shares rose 0.21pc, while Japan’s Nikkei stock index was up 1.74pc.
In Hong Kong, the Hang Seng index dipped 0.06pc, or 15.67 points, to 26,506.18.
Capping broader gains, however, was a perceived lack of progress coming out of US-China trade negotiations.
Reports of a “Phase One” trade deal between the United States and China last week had earlier cheered markets but the dearth of details around the agreement has since curbed this enthusiasm with oil prices extending declines, Chinese stocks weaker and the safe-haven yen holding gains versus dollar.
The focus has now shifted to Europe where officials from Britain and the EU will meet at a make-or-break summit on Thursday and Friday that will determine whether or not Britain is headed for a so-called no-deal Brexit.
U.S. stock futures rose 0.23pc on Tuesday in Asia after the S&P 500 ended 0.14pc lower.
Coming up today
Hays investors have reason to be nervous heading towards today’s trading statement. The FTSE 250 recruiter’s peers PageGroup and Robert Walters both saw their share prices slip last week after unveiling disappointing results, with the same widespread pressures likely to have weighed on Hays. Like its sector rivals, Hays has seen net fee income slip as companies delay full-time hires, with Brexit a particular issue.
Interim results: Lidco Group, Schroders
Preliminary results: Bellway
Full-year results: Dotdigital
Trading statement: Hays Plc, Ixico, Marston’s, Merlin Entertainments, RWS Holdings
Economics: Employment and wage growth (UK), ZEW economic confidence (Germany), housebuilder confidence (US)