Neil Woodford’s former flagship fund will start to return capital to investors this month, but the first payment will be later than expected. Link Fund Solutions, the authorised corporate director for the fund, which is now called LF Equity Income (GB00BZ01L372), said a final valuation of the fund’s assets would take place on 17 January – as originally planned – and that the wind-up would start the next day. But the first payment of capital to investors is now expected to be on or around 30 January, rather than around 20 January.
“We intended that investors in the fund would receive their first payment on or around 20 January 2020," said Link. "This date will now be on or around 30 January 2020. This change to the timetable is required to ensure that investors retain exposure to the equity market for the entire period prior to the fund being wound up as required by the regulations. This delay also allows a significant portion of the fund’s holdings in money market instruments to be liquidated in a way that minimises costs to the fund.”
The calculation of the amount investors are due to receive will be made on 24 January rather than 6 January, as originally planned. Link will write to investors in LF Equity Income to inform them how much this will be on 28 January. Link has also outlined other key dates for the fund, as shown in the table below. These include its income payments and the publication of its 2019 annual report.
| Date | Event |
| 17-Jan | Pre-wind up price calculation and calculation of income distribution |
| 18-Jan | Fund wind-up commences |
| 24-Jan | Calculation of amount per share to be paid in first capital distribution to investors |
| 28-Jan | Notification to investors of amount per share to be paid in first capital distribution to investors |
| 30-Jan | Expected date of first capital distribution to investors |
| 28-Feb | Payment of normal quarterly income as at 31 December 2019 |
| 17-Mar | Payment of income for the period 1 – 17 January 2020 |
| 30-Apr | Publication of fund’s annual report for the year ending 31 December 2019 |
Source: Link Fund Services
Link suspended trading of the fund amid elevated redemption requests in June last year, and towards the end of 2019 decided to wind it up and return capital to its investors, rather than attempting to reopen it.
Asset manager BlackRock has been appointed to sell LF Equity Income’s liquid assets, and buy cash funds and FTSE 100 trackers with the proceeds. PJT Partners is helping Link to sell the fund’s unlisted and highly illiquid listed holdings. But some reports suggest that investors will only get back a fraction of their capital once the fund, which has assets worth around £3bn, is wound up.
The fund’s poor performance, which notably deteriorated in 2017, continued after its suspension last June. But it has not been as bad in recent months. Link said in its latest update that between 3 June 2019 – the date of the fund's suspension – and 8 January 2020, it lost 14.9 per cent compared with a 9.4 per cent rise for the FTSE All-Share index. But between 15 October 2019, when BlackRock and PJT Partners were appointed, and 8 January 2020 the fund made a positive return of 1.2 per cent – albeit less than the FTSE All-Share's 6.2 per cent rise.
LF Woodford Income Focus Fund's (GB00BD9X6P73) management, meanwhile, has been assumed by Aberdeen Standard Investments. The £250m fund continues to be suspended from trading, but Link expects to reopen it no later than February. Link and Aberdeen Standard Investments are waiving their fees on the fund between late December 2019 and the end of May 2020 to offset the costs of repositioning it.
The fund will be renamed ASI Income Focus and change its income objective on 23 January. It will no longer aim to deliver 5p per share per year, but instead target “a yield higher than the average yield of the FTSE All-Share index over a three-year rolling period".
