February 28, 2024

Neil Woodford’s investment funds to be closed

Woodford Investment Management is closing after its investment manager was sacked from its flagship fund and went on to quit his role as manager of his two other funds. The move has left many angry investors counting the cost of being heavily out of pocket.
Neil Woodford’s equity income fund initially suspended

The equity income fund was initially suspended for 28 days back in June following the withdrawal of cash by investors. It was anticipated that the suspension would end before Christmas; however, the fund will not now re-open in the interests of the investors.

An investment manager and the UK’s best-known stock-picker, Neil Woodford was removed from the position more than four months after the suspension. He is best known for selecting unloved shares in the hope that he would be snapping up cheap ones to stockpile. His vision was that these investments would produce positive returns when they came into favour.

Companies fell rapidly in value in recent years

Some of the companies Woodford chose fell sizeably in value over recent years, which was the cause of his fund’s underperformance. As investors withdrew their money from the fund, the proportion in unlisted companies rose, leaving him to sell the more liquid investments to release cash.

Fund was suspended and then wound up

The investors pulled their money out quicker than he had been able to manage liquidity, which led to the fund being suspended and eventually wound up. Woodford, who had a career spanning three decades, also stepped down from the income focus fund and the Woodford patient capital investment trust.
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How many people are affected by the collapse of the fund?

Investors are understood to be able to regain their money in stages; however, they are being warned that they should be ready to accept substantial losses. Final payments could take up to a year to be paid and it is estimated that several hundred thousand people have been affected by the fund collapse.