JEFF PRESTRIDGE: Five million reasons why fees must be waived until suspended Woodford fund reopens

Investors with money in Woodford Equity Income continue to demand that the manager waive its fees until the suspended investment fund reopens. They are also calling for the regulator to step in and help them get back their cash.

The GBP3.4 billion fund, managed by Neil Woodford, was suspended in early June after a number of big institutional investors asked for their money back as a result of its continued poor performance.

Woodford Investment Management was unable to meet their requests because of the fund’s heavy exposure to illiquid unquoted stocks, triggering its closure.

The GBP3.4 billion fund, managed by Neil Woodford, was suspended in early June after a number of big institutional investors asked for their money back

 It is now unlikely to reopen until December at the earliest – and some investment experts believe it will instead be wound up with any cash from the sale of assets distributed to investors.

Despite trapping investors inside Equity Income, and Woodford overseeing a fire sale of assets to free up cash to meet the wall of redemptions when (or if) the fund reopens, WIM continues to levy fund fees of GBP65,000 a day.

This means WIM has taken more than GBP5 million in fees since investors were prevented from selling their stake nearly 11 weeks ago. At least another GBP5 million in fees could be taken before investors are able to sell their holding.

 Kevin Sime, a 61-year-old former marketing and sales manager for two investment firms based in Scotland, is one of hundreds of Woodford investors who have contacted The Mail on Sunday to complain about WIM’s decision to continue charging fund fees.

Kevin and wife Helen, from Edinburgh, invested a five figure sum in Equity Income and are sitting on losses of around 30 per cent.

He says: ‘Woodford’s refusal to forgo the management fee is just another poor decision by a manager whose reputation is terminally damaged.

It also does nothing for the reputation of the wider investment industry that is often seen by the public as out of touch, shameless and greedy.’

JEFF PRESTRIDGE: Five million reasons why fees must be waived until suspended Woodford fund reopens

What Neil Woodford has charged in fees since equity income has closed

 He adds: ‘Woodford’s decision is beginning to smell of opportunism – a question of taking what you can while you can.

The fund is finished and the regulator should step in and ensure it is wound up as quickly and efficiently as possible.’

Although Woodford justifies the fee on the grounds that the fund needs to be managed while dealings remains suspended, this argument has no truck with Kevin. 

He says: ‘When we invested, we fully accepted a fee would be charged for managing the assets in accordance with the fund’s objectives of delivering a reasonable income, together with capital growth.

‘What we did not agree to – or expect – is to be charged for a frantic repositioning of the fund and the selling of assets to make the fund more liquid.

‘None of that is connected with generating capital growth.’

Jacqueline Nightingill, from Chingford in Essex, was hoping to use some of the money she and husband Jeffrey invested in Equity Income to spend on their golden wedding anniversary in November.

 They invested when the fund launched in June 2014, on the back of Woodford’s reputation at Invesco and glowing recommendations received from Hargreaves Lansdown.

Jacqueline, a 73-year-old former information officer at City of London Corporation, says the amount they invested – GBP16,000 between them – was ‘hard earned and money they could ill afford to lose’.

She adds: ‘It’s immoral that Woodford is earning GBP65,000 a day, seven days a week, from our misfortune.’

Italo Abri and Mark Jackson also say the fees should be waived.

Italo, from Camberley in Surrey, was investing monthly into Equity Income until October last year, when he turned off the contribution tap as a result of the fund’s poor performance.

Mark, a 71-year-old retired Royal Air Force officer from Romsey in Hampshire invested via Hargreaves Lansdown. ‘Woodford’s greed shows no limits,’ he says.

On Friday, for the 11th week running, Woodford confirmed its intention to continue charging fees.

 

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