Investors in LF Equity Income Fund (GB00BLRZQ844), formerly known as LF Woodford Equity Income, will receive between 46.3633p and 58.9936p per share as it makes its first capital distribution from the sale of its assets. This represents around 74 per cent of investors’ assets but the exact amount investors will get depends on which share class they hold.
The fund went into wind-up on 18 January and investors will receive the money on, or a few days after, 30 January. This is 10 days later than originally planned because Link Fund Solutions, the fund’s authorised corporate director, wanted to ensure that investors retain exposure to the equity market for the entire period prior to the fund being wound up as required by regulations. The delay also allowed a significant portion of the fund’s holdings in money market instruments to be liquidated in a way that minimises costs to the fund.
Asset manager BlackRock was responsible for selling LF Equity Income’s liquid assets.
|Value of LF Equity Income distribution|
|Share class||Pence per share|
|A Sterling Accumulation (GB00BLRZQ513)||57.9127|
|A Sterling Income (GB00BLRZQ406)||47.5873|
|C Sterling Accumulation (GB00BLRZQ737)||58.6631|
|C Sterling Income (GB00BLRZQ620)||48.2426|
|F Sterling Accumulation (GB00BZ01L372)||46.3633|
|X Sterling Accumulation (GB00BLRZQ950)||56.4549|
|X Sterling Income (GB00BLRZQ844)||46.4091|
|Z Sterling Accumulation (GB00BLRZQC88)||58.9936|
|Z Sterling Income (GB00BLRZQB71)||48.4932|
|Source: Link Fund Solutions|
“This payment represents just over 70 per cent of the current fund value and has been raised from the sale of the liquid element of the portfolio,” said Ryan Hughes, head of active portfolios at broker AJ Bell. “Investors will be acutely aware that a large portion of their investment remains trapped in the illiquid, unquoted holdings that [specialist broker] Park Hill is trying to sell. Selling the liquid holdings was the easy bit. It is a hugely challenging task to sell the illiquid holdings in a timely fashion and investors still remain in the dark on how long they will have to wait for the remainder of their money and, importantly, how much they are likely to get back. While this payment of the first tranche of the liquidated assets will be a relief for thousands of investors who have been trapped in the fund since June last year there is still huge uncertainty around the money stuck in illiquid assets.”
Investors seem likely to get less back than they originally put into LF Equity Income due to its poor performance. For example, the Z accumulation share class is down 29 per cent over one year, 37 per cent over three years and 28 per cent over five years to 27 January 2020. The full extent of what each investor in LF Equity Income lost on their original investment will depend on when they invested in the fund and in which share class.