By Simon Jessop, Sinead Cruise and Carolyn Cohn
LONDON (Reuters) - Neil Woodford has been ousted as manager of his flagship LF Woodford Equity Income Fund, which will now be wound up to pay back investors trapped in the fund since June.
The fund's administrator, Link Fund Solutions (LFS), said on Tuesday that it had taken the decision to close the fund - which has been suspended - because Woodford's efforts to sell down his illiquid holdings and move into liquid stocks ahead of a planned December reopening of the fund had not gone to plan.
It is the latest blow to storied stockpicker Woodford, once a darling of retail investors, who has seen his reputation tarnished after a liquidity crisis forced him to stop clients leaving the 3.7 billion pound ($4.6 billion) Equity Income Fund in June.
Neil Woodford, in a separate statement, firmly rejected the move to shut the fund and oust him as manager.
"This was Link's decision and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income fund investors."
Woodford will cease to be the investment manager of the fund with immediate effect and the fund's assets will be split into two portfolios managed by others, LFS said in a statement.
BlackRock (NYSE:BLK) Advisors will take charge of selling the fund's listed assets while PJT Partners will continue with its previously agreed role in helping to sell the fund's highly illiquid assets, Link said.
Shares in Neil Woodford's separate listed fund Woodford Patient Capital Trust (WPCT) (L:WPCT), which shares some of the same holdings as the suspended fund, slid to a record low at the open, and by 0703 GMT were trading down 8% at 34.75 pence a share.
The winding up of LF Woodford Equity Income Fund - which will be stripped of Woodford's name - will begin on Jan. 17, 2020, and will allow an initial payment to be made to investors.
At the heart of Woodford's troubles was the scale of his holdings in unlisted or illiquid assets, which are hard to sell quickly.
LFS said the fund had risked being subjected to a further extension of its suspension and potentially unequal treatment of investors, particularly those who chose to remain invested in the fund.
"Whilst progress has been made in relation to repositioning the Fund's assets, this has unfortunately not been sufficient to allow reasonable certainty as to when the repositioning would be fully achieved and the Fund could be re-opened," Link said in a letter to investors.
"LFS has concluded that an orderly realization of the Fund’s assets allows the return of money through interim payments to investors more quickly than if the Fund had remained suspended for a longer period of time."
In choosing BlackRock, LFS said the company, the world's biggest asset manager, was "best placed to carry out this role due to its transition and investment management, trading and capital markets expertise and experience".
Woodford Patient Capital Trust said it noted the decision by Link and was continuing to review its own management arrangements, with a further announcement in due course.