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Woodford Equity Income – fund to be wound up

Link Asset Services has today announced that it will not be re-opening the Woodford Equity Income fund.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Link Asset Services has taken the decision not to re-open the Woodford Equity Income Fund. This means that the investments will be sold, and cash will be returned to investors. Link expects the process to begin in January 2020. The money investors get back will be determined by the ability to sell the assets and the price that is achieved for them.

The Woodford Equity Income Fund has been suspended since 3 June. Link had previously indicated that the fund would likely be suspended until the beginning of December, when it was expected to re-open and continue to be managed as an equity income fund.

Link has released a statement today explaining that after “careful consideration”, they, as the fund’s Authorised Corporate Director (ACD), have taken the decision to instead “wind it up as soon as practicable”.

Link plans to return cash to investors at the earliest opportunity, and has appointed BlackRock Advisors (UK) Limited and specialist stockbroker Park Hill to help sell the assets. As of 15 October 2019 Woodford Investment Management will no longer be the Fund’s manager, and subject to regulatory approval the Fund will be renamed the LF Equity Income Fund.

Link said in a statement today:

“We have continued to consider the future of the Fund over the period of its suspension from 3 June 2019. After careful review of the Fund and its holdings we have decided not to re-open the Fund and instead to wind it up. We recognise that this will come as a disappointment to some investors.”

Link confirmed it had been in discussions with the regulator and is now seeking formal permission from the Financial Conduct Authority to wind up the fund. The FCA has guidelines which govern this process.

Why is the fund being closed?

Link has concluded that it is in the best interests of investors not to reopen the fund. The Woodford Equity Income Fund had been suspended since 3 June to give the investment manager of the Fund, Woodford Investment Management time to reposition the fund into more liquid, easy to trade, companies.

Link had agreed with Woodford Investment Management a timeline to complete this repositioning by early December 2019.

However, Link has today stated that while progress has been made, it has not been sufficient to indicate when the fund could reopen. As a result, Link has instead concluded that, “it is in the best interests of all investors for the Fund to be wound up by way of an orderly realisation of the Fund’s assets”.

Will I get my money back?

Link expects the winding up of the fund to begin 17 January 2020, with the first payment to investors anticipated by the end of that month. A fund winding up means that it is closed and the money will be returned to investors in instalments as the assets are sold off. Link has appointed BlackRock Advisors to help sell the more easily tradable stocks in the portfolio, and will be working with specialist stockbroker Park Hill to find buyers for the smaller, unquoted companies.

For investors who hold the Woodford Equity Income Fund through Hargreaves Lansdown, your money will be returned via the platform. For investors who hold the fund directly, your money will be returned via Link.

The payments to investors will be determined by the share price of the underlying assets when they are sold.

What happens next?

Pending permission from the regulator, the fund’s name will be changed from the Woodford Equity Income Fund to LF Equity Income Fund. Link will continue to act as the ACD for the fund, and will be seeking formal permission to wind it up from the regulator.

We will continue to waive our platform charge for the fund while it is wound up. We are speaking to Link, the fund’s administrator and the regulator and will keep clients informed of further information and when we expect their money to be returned.

Investors do not need to take any action at this point.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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