The pressure on Neil Woodford to waive the management fees on his ailing flagship fund Equity Income is not going away.
Although Woodford Equity Income has now been suspended for nearly 12 weeks, investors remain more vocal than ever in their call for the fallen manager to stop depleting their holdings by taking fees equivalent to £65,000 a day from the £3.2 billion fund.
Time has not tempered their anger. Far from it. Scores of scorned investors continue to contact the MoS, calling for Woodford, one of the few household names in the investment industry, to see sense and suspend the fund’s fees.
Investors remain more vocal than ever in their call for the fallen manager to stop depleting their holdings by taking fees equivalent to £65,000 a day from the £3.2 billion fund
Since dealings in Equity Income were stopped in early June, preventing investors from selling their holdings, Woodford has drawn fees from the fund totalling £5,460,000.
This figure will top £10 million before December when a decision will be taken on whether the fund can reopen or remain shut.
Most experts believe it is unlikely Equity Income will ever reopen. More likely, they say, is for the fund’s assets to be sold and investors handed a percentage of their cash.
While Woodford maintains the fund’s charges are justified as he continues to manage it from his Oxford base, investors beg to differ.
They accuse him of rewarding himself – and his funds operation Woodford Investment Management – for failure.
Alan Kilby is among his critics. The 77-year-old from Stourbridge, West Midlands, is one of tens of thousands of investors with money trapped in Equity Income, invested via pensions and Individual Savings Accounts.
What Neil Woodford has charged in fees since Equity Income was closed
Alan, a retired sales development manager for a wholesale business, says Woodford should ‘stop milking’ his investors.
He says: ‘I am so pleased that The Mail on Sunday is keeping the pressure on Mr Woodford to see sense and axe the management fee on Equity Income. I find it disgusting that he is still taking a fee. He should sort out the investment mess he and he alone has created without penalising investors.’
Alan believes Woodford’s stubbornness will backfire spectacularly if dealings in Equity Income recommence with most investors like him ‘voting with their feet’ and selling their holdings.
Anthony Forsyth, a retired Lloyds’ underwriter from Loxwood in West Sussex, says Woodford should waive fees ‘without a shadow of a doubt’. He invested in Equity Income when the fund launched in June 2014. ‘Mr Woodford has let down a lot of investors,’ he says.
What also angers him is that Woodford was able to use the word ‘income’ in the fund’s name despite the fact it was delivering a dividend yield less than the UK stock market.
Last year, the fund was officially ‘declassified’ as an equity income fund by the Investment Association – a trade organisation responsible for determining which sectors funds sit in. But, extraordinarily, its name did not change.
‘It seems wrong that a fund can call itself Equity Income when that is no longer its overriding objective,’ says Anthony. ‘It’s misleading and I was certainly not aware of a shift in the fund’s emphasis.’
The reason for Equity Income’s June suspension was that it did not have enough liquid assets – easily tradeable shares – to meet a big redemption demand from Kent County Council which wanted to sell its £238 million stake. A big slice of the fund was instead invested in non-income producing unquoted companies – above its permitted limit.
David Whan, a retired chartered chemist from Darlington, also believes Woodford should stop charging fees on Equity Income. But he is more angry with Hargreaves Lansdown through which he invested a five-figure sum in the fund. He says: ‘It is a disgrace that Woodford is still charging a fee and I hope he will at some stage be held to account by the regulator.
‘But I am more furious with Hargreaves that was promoting the fund as a best-buy right up until the day dealings were suspended.’
David says that if Hargreaves had removed the fund from its best-buy list when it began to have concerns in 2017, he would have sold his holding and reinvested it elsewhere.
He is now considering moving his investments away from Hargreaves although he is unhappy with the charges he would have to pay. Unlike other fund platforms, and despite regulatory pressure for exit fees to be banned, Hargreaves continues to charge a £25 account closure fee plus £25 per share or fund transferred to a rival.
On Friday, Woodford confirmed – for the 12th consecutive week – its intention to continue levying a fee on Equity Income.
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