Shares in Woodford Patient Capital Trust (WPCT.L) surged 25% on Thursday after the board confirmed that money management giant Schroders will take over from fallen stock picker Neil Woodford.
Schroders, which manages over £420bn, is expected to take over by the end of the year and the trust will be renamed the Schroder UK Public Private Trust, scrubbing the legacy of founder Neil Woodford.
Schroders will manage the fund “in line with the Company's existing investment objective and policy,” the board said, and will continue to invest in both private and public companies, despite the difficulties this created for Neil Woodford.
The appointment follows the sensational collapse of money manager Neil Woodford’s investment empire last week. Woodford was forced to close down Woodford Investment Management (WIM) after he was fired as manager of the Woodford Equity Income Fund.
Neil Woodford was once seen as one of Britain’s best money managers but has experienced a spectacular fall from grace after a liquidity crisis at his flagship Equity Income Fund in June. Problems have only escalated since then, culminating in Woodford’s dismissal last week and the collapse of his firm. The board of the Woodford Patient Capital Trust had said they were considering replacing Woodford as manager prior to his resignation.
Woodford Patient Capital Trust is one of three funds set up by WIM and manages almost £800m of investor money. It is the only listed part of Woodford’s business.
Susan Searle, chair of the trust, said Schroders was hired after “a competitive process” and thanked shareholders for their support during “challenging circumstances.”
“Throughout the process, the Board has had a clear focus on achieving an outcome that protects and enhances long-term shareholder value and we believe Schroders is best placed to deliver this,” Searle said. “A well-managed handover is underway to protect shareholder value and deliver long-term performance for all shareholders."
Searle praised Schroders’ “careful and considered long-term approach to investment, backed by its substantial research resources in both public and private assets.”
Schroders will waive its management fee for three months and then take a 1% fee on assets up to £600m and 0.8% above that. Schroders is also waiving a performance fee until 2022 and then will take a 15% cut of any gains above 10% of net asset value, subject to conditions.
Moira O’Neill, head of personal finance at Interactive Investor, said the fees were “fair” and “reasonable.”
“Ultimately, the trust will only be successful if the trust can attract new investors, raise new cash and take part in the follow-on-fund-raising rounds,” O’Neill said.