Link Fund Solutions is "considering indications of interest from several investment managers" regarding the management of the currently-gated LF Woodford Income Focus fund (WIFF) and expects a decision to be made "in the coming weeks".
In a letter to investors on Wednesday (30 October), Link said it had been "considering various options available to us" in the two weeks since WIFF was suspended, one of which included appointing an alternative investment manager to replace Woodford.
The second option was to merge WIFF into another fund, with the possibility of winding the fund up as an alternative.
Dealing in WIFF was suspended after Neil Woodford tendered his resignation as manager on 16 October "to protect investors from an increased level of redemptions that [Link] anticipated", which came a day after it was announced WIFF's stablemate, Woodford Equity Income, was to be wound up.
The Big Question: Which alternatives might fit the bill as replacements for stricken Woodford fund?
Link explained: "We expected that redemptions in [WIFF] would reach a level whereby it may not have been possible to continue to meet redemption requests without prejudicing the interests of remaining and redeeming investors.
"This is because as a ‘forced seller' of its assets to meet redemptions, the values received by the fund for such assets might be adversely impacted and the fund might not receive full value from such sales. This may affect the value that investors in the fund receive for their shares."
Link, which acts as authorised corporate director (ACD) for both of Woodford's funds, added that appointing a new manager for WIFF "remains an option", with a number of firms showing interest.
"We have also asked a leading independent investment research firm to help is to identify any other investment managers that may be suitable to assume the role of investment manager of the fund," it added.
Link said it would look to decide whether this is a viable option in the coming weeks. It was announced last week that Schroders would take over management of Woodford's third mandate, the closed-ended Woodford Patient Capital trust.
Meanwhile, it had also asked the independent research firm to assist in finding funds with similar investment objectives to help "facilitate a scheme of arrangement or similar".
This would involve "transferring [WIFF's] assets into another UCITS fund in exchange for investors receiving shares in that fund", Link said.
It added: "The new or receiving fund will offer a similar investment objective and policy and be subject to the same regulatory supervision.
"If it is decided to pursue this option investors will be given the chance to vote on our proposal. We are considering which funds and managers may be suitable for this option."
The ACD said both of those two options "have the advantage of providing an element of continuity and certainty for investors".
However, it added: "If neither of the options above is viable, or it is otherwise thought to be in the best interests of investors to do so, then we will look to wind-up the fund through a process of an orderly realisation of the fund's assets.
"This will result in the fund's assets being sold in a manner that seeks to best protect value and the proceeds of those sales will then be distributed to investors."
In the two weeks since the suspension, WIFF has returned 1.39% for locked-in investors, outperforming its FTSE All-Share Total Return benchmark index, which has gained 1.1%.
.
