Embattled money manager Neil Woodford is shutting down his business after a spectacular fall from grace.
Neil Woodford said in a statement late on Tuesday: “We have taken the highly painful decision to close Woodford Investment Management.
“I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management and invested in our funds.”
As part of the decision, Woodford has quit as fund manager for his Patient Capital Trust and the Income Focus Fund.
Woodford Patient Capital Trust said in a statement after markets closed on Tuesday that “Woodford Investment Management Limited ("WIM") has today served notice of termination in relation to its role as Portfolio Manager.”
Woodford will stay on for three months to manage a smooth transition and the Patient Capital Trust board said it is in “advanced discussions” with a new manager.
Woodford also confirmed he has resigned from the Income Focus Fund, the third and final fund set up by Woodford Investment Management.
“We will fulfil our fund management responsibilities to WPCT and the LF Woodford Income Focus Fund and once completed will close the company in an orderly fashion,” Woodford said in a statement.
The resignations and closure of the firm comes less than 12 hours after Woodford was sacked from his flagship Equity Income Fund.
The Equity Income Fund, which had £3.1bn under management, ran into trouble at the start of the year after investing in private company stock that was difficult to sell. The fund couldn’t offload investments quick enough and was forced to suspend withdrawals in June. Since then, its value has declined by over 10% and the fund administrators took the decision to close the fund completely this morning, dismissing Woodford in the process.
Woodford said in an earlier statement: “This was Link’s [the fund administrator] decision and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income Fund investors.”
Yahoo Finance UK understands that the loss of mandate on the Equity Income Fund made the rest of Woodford’s business unviable. Woodford continued to take a management fee from the Equity Income Fund — earning an estimated £65,000-a-day — while it was frozen, which supported the wider business.
Woodford didn’t earn a management fee from the Patient Capital Trust, but instead took a performance fee. Recent poor performance of the Patient Capital Trust meant this was not enough to support the wider business.
The implosion marks the culmination of a specular fall from grace for Woodford. He built a reputation as a star stockpicker during a career spanning over 25 years at Invesco Perpetual, before leaving in 2013 to set up a firm bearing his name. Assets in his flagship Equity Income Fund peaked at £10bn in 2017, but underperformance led to significant outflows over the last three years.
Oscar Williams-Grut is Yahoo Finance UK’s City correspondent. He covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.