Trapped Woodford Equity Income investors have been hit with a series of bombshells as they learn they could be waiting another year before they see their money back, and that they have had to foot a staggering £16m ($20.6m, €17.6m) bill for the fund’s wind-up so far.
In its latest update to trapped shareholders, Link Fund Solutions confessed the sale of the remaining £288m worth of assets might not be realised until mid to late 2021.
As such, the authorised corporate director (ACD) of the fund, now called LF Equity Income, said it was unable to provide a specific endpoint by which the fund’s wind-up will be complete and cash returned to investors.
If Link’s projections are accurate, that means investors will have been waiting more than two years to get their money back since the fund suspended on 3 June 2019.
Willis Owen head of personal investing Adrian Lowcock said the fact investors could be trapped for another year and possibly longer is “shocking”.
So far Link has returned £2.45bn worth of trapped money to investors in three rounds of capital distributions. But Lowcock said this fact will be little to no comfort to investors who are still incurring additional fees as long as the fund is in wind-down mode.
Administrators fees
Revelations about the delayed payments come as investors also learn they shelled out £16m to the administrators tasked with the disposal of the fund’s assets.
The fund’s annual accounts, published alongside the shareholder update, show Blackrock is due £11m for its hand in selling down the fund’s liquid stocks between 15 October 2019 and 30 March 2020.
A further £3.2m is owed to PJT Partners, which has been facilitating the sale of the illiquid assets, including £2.8m it will receive upon completion of the Acacia deal, which it was has been heavily criticised for.
Meanwhile Debevoise & Plimpton, which provided legal support for the unquoted sales, earned £2.5m in fees.
Arbitrary charges
AJ Bell head of active portfolios Ryan Hughes said the figures “will surely stick in the throat of all investors who have been waiting patiently to get some of their money back”.
“While these fees would have been due regardless of who was selling the assets, seeing such sums will make for painful reading for investors,” he said.
Lowcock added: “This incident has bought shame on the sector, and shone a spotlight on the resolution process for funds which fall into administration.
“Clearly it needs overhauling, as we cannot have a situation where investors are at the mercy of faceless ‘administrators’ who seem to be able to charge whatever they like for winding up the fund.”
For more insight on UK wealth management, please click on www.portfolio-adviser.com
