Woodford Income Focus fate to be decided by year-end

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Woodford Income Focus fate to be decided by year-end

Link Fund Solutions (LFS) is in the "final stages" of deciding the fate of the still-suspended LF Woodford Income Focus fund, the authorised corporate director (ACD) said this Wednesday.

In its latest 28-day review letter to investors whose investments are currently stuck in the stricken offering, Link said the fund will continue to be gated.

The ACD added it is continuing to "undertake detailed consideration and analysis of the various options available to us in respect of the future of the fund". Those options currently include appointing a new manager to replace Woodford Investment Management or transferring the fund's assets into another UCITS fund.

The review of whether either of these options is in the best interests of investors"

"The review of whether either of these options is in the best interests of investors, which includes us being sufficiently assured about the long-term viability of the fund and that any costs associated with the re-opening are fair and proportionate, is continuing and will be concluded soon," said Karl Midl, director at LFS.

"If neither of [these] two options… can be pursued in a way that is in investors' best interests then we will make an application to the Financial Conduct Authority for approval to wind-up the fund through a process of an orderly realisation of the fund's assets."

Midl added he expected the review to be completed before year-end.

The LF Woodford Income Focus fund is down 2% since it was suspended until 3 December 2019, the letter said, falling behind its benchmark FTSE All-Share's 0.21% gain.

November letter update

On 13 November, Link Fund Solutions confirmed the suspension of the Woodford Income Focus fund will continue, while setting out options to "best serve investors".

The Woodford Income Focus fund was suspended on 15 October to "protect investors from an increased level of redemptions" in the fallout from the Woodford saga, which has seen Woodford Investment Management shut up shop.

Link has announced it is working with a "leading independent research firm" to establish a shortlist of investment managers it believes are "suitable replacements" for Woodford.

Without disclosing those shortlisted, Link has also said it has held "initial meetings" with managers to "confirm their suitability" and explore which of the two options "best serves investors' interests".

Those options are either "the appointment of an alternative investment manager to replace Woodford, with [Link] continuing to act as the fund's ACD" or "transferring the fund's assets into another UCITS funds in exchange for investors receiving shares in that fund through a scheme of arrangement".

At the time, Link has said these options will provide "continuity and certainty" and it "expects" to confirm which option is best "in the next 21 days".

The firm has clarified that if neither of those options is in the "best interest" of investors, it will inform investors "at the earliest opportunity" to explain why.

In that event, Link said the most likely outcome is an application to the FCA for "approval to wind up the fund" through a process of an "orderly realisation of the fund's assets".

Link has assured investors that it will, together with the depositary, Northern Trust, will formally review the suspension "at least" every 28 days.

 

This article was first published by Investment Week, a sister title to International Investement

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