When discussing yesterday the ongoing devastation of one-time investing "legend" Neil Woodford, and the accelerating liquidation of stocks across his various investment vehicles to meet the surge in redemptions across fund that still have yet to be gated, we quoted Justine Fearns, a manager at Chase de Vere, who said that “considering all of the negative publicity surrounding Woodford, the fund [Income Focus] will probably, rightly or wrongly, be tarred with the same brush as the Equity Income fund,” adding that she expected outflows from Woodford's Income Focus to continue.
We then added that "the only question is when this next fund will itself be permanently gated, as will Woodford's career in the asset management industry."
24 hours later we may have the answer.
According to the FT reports, on Thursday, Neil Woodford lost his last remaining large client, sending his AUM plunging to just £5 billion, roughly half where it was just days earlier as the advisory network Openwork withdrew its support from Britain’t best-known fund manager on Thursday, replacing Woodford on a £330 million mandate.
The relentless - and now terminal - exodus of funds is the latest in a series of "devastating blows" that have decimated the once legendary manager’s assets under management in the past week, following his decision to block trading in Woodford Equity Income, his flagship fund, trapping £3.7 billion of investors’ money.
Openwork’s decision came just one day after we reported that wealth manager St James’s Place pulled a whopping £3.5bn from Mr Woodford, wiping out 40% of the manager’s assets under management. In retrospect, the move was prudent as it wasn't caught be the imminent gating that will befall any remaining Woodford investors.
According to the FT, Woodford managed the £330m Omnis Income and Growth fund on behalf of Openwork, a network of more than 2,000 financial advisers. But what is worse is that even aside from the recent gating shock, the fund had already lost 25.3% in value in the past 12 months compared to a 3% drop in UK stocks.
OPenwork's wealth and platform director, Mike Morrow, said: “We have been working hard with the Omnis Investment Team [Openwork’s specialist investment company] over recent months to ensure that the Omnis Income and Growth fund is delivering to its mandate and have the utmost confidence in the value of portfolio and the underlying investments within it.”
Woodford's spectacular implosion began on Friday when Kent County Council pension fund voted unanimously to withdraw a £263m mandate from his company. His funds were also cut from the influential Hargreaves Lansdown list of recommended funds, which account for a large portion of the funds’ assets.
And as the onslaught of redemption requests continues, Woodford Investment Management has been liquidating most if not all of its underperforming, illiquid investments as follows:
- NewRiver REIT to 15.61% from 20.60%
- Purplebricks to 21.51% from 23.87%
- Kier Group to 15.87% from 20.01%
- Provident Financial to 18.43% from 23.44%
- Watkin Jones to less than 5% from 9.19%
- Card Factory to less than 5%
- e-Therapeutics to 14.11% from 17.89%
We expect Woodford's holdings in all of these names to hit 0% in very short notice.
Demonstrating just how fleeting is the glory of "investment giants", in a video posted on Tuesday night, Woodford appealed to investors not to abandon the Income Focus fund. “It doesn’t have any exposure to illiquid or unquoted securities and consequently isn’t exposed to the same issues that the Woodford Equity Income fund is,” he said. “And it’s positioned, I believe, for the economic and market environment that we’re likely to see over the medium and long term.”
Alas, as of this moment nobody believes Woodford, and what we are observing is a "terminal run on the fund."
Which also means that the last remaining question, the one posed by Bill Blain this morning, whether Woodford's collapse will be a "systemic moment" for the fund management industry, will be answered shortly.