Woodford client losses revealed

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Trapped investors in the £3 billion Woodford Equity Income fund are forecast to lose a third of their remaining investment according to modelling of the wind-up process commissioned by administrator Link Fund Solutions.

The modelling, conducted by private equity specialists PJT Park Hill last month, outlines a base case forecast of 32.5% losses as the fund is liquidated. Under the worst-case scenario, the fund’s value would fall by 42.6%. Woodford Investment Management, the sacked former managers of the fund, had claimed the impact on the fund had it reopened would have been much less severe. In a presentation for Link prepared by Woodford in October in a bid to retain the mandate, it estimated worst-case losses of 9.3% from the remaining repositioning it believed was required for the fund to reopen in December.

The fund group was sacked before it was able to deliver the presentation. This estimate did not however account for the likely impact of the large scale withdrawals expected. Woodford Investment Management was anticipating the fund would shrink to around £750 million had it reopened, retaining some support from financial advisers who had signalled their backing.

Link said its decision to wind-up Woodford Equity Income was based on ‘insufficient progress on the repositioning of the fund’. The fund’s wind-up is set to add to the mounting losses already suffered by investors trapped in the fund. Since the fund’s launch in June 2014 to the announcement of its wind-up last month, investors have lost 18%, while the FTSE All-Share has risen 33%.

In the last two years the fund is down 37% as the portfolio has unwound dramatically, including a 19% fall since the fund was suspended in June.