Neil Woodford was once regarded as the most trusted fund manager in the UK. For more than two decades at Invesco Perpetual, he built a reputation for steady performance and an instinct for navigating crises. Investors flocked to his funds after the dot‑com bubble and the 2008 financial crisis, viewing him as a safe pair of hands who resisted market fads and prioritised fundamentals.
By 2014, Woodford’s name had become synonymous with reliability in retail investing. His departure from Invesco and subsequent launch of his own firm sparked some of the biggest headlines in the UK asset management industry in recent memory, while the rapid rise of Woodford Investment Management (WIM) and its flagship funds seemed at first to vindicate his decision.
Yet within five years, that same enterprise would collapse, trapping hundreds of thousands of investors and prompting one of the most far‑reaching regulatory investigations in the history of the Financial Conduct Authority (FCA). The final chapter arrived in August 2025, when the regulator issued fines totalling nearly £46m and barred Woodford from managing retail funds.
From star manager to entrepreneur
Woodford’s career at Invesco Perpetual spanned more than 25 years, during which time he ran some of the largest and most popular equity income funds in the UK, with a management style rooted in long‑term, contrarian bets.
Often avoiding cyclical sectors such as banks and energy when they were in favour and focusing instead on companies he believed were undervalued by the broader market, the manager was known to some as ‘the man who made Middle England rich’.
In October 2013, Woodford announced his departure from Invesco, where he ran more than £30bn across his various mandates. The move surprised many in the industry.
Then in 2014, he unveiled Woodford Investment Management, positioning it as a boutique manager focused on transparent, long‑horizon strategies.
The firm’s first product, the Woodford Equity Income fund, launched in June 2014. Structured as an open‑ended investment company, it promised investors a combination of income and capital growth by investing primarily in UK equities with selective overseas exposure.
The response was immediate and overwhelming. Many retail and institutional clients moved their money directly from Woodford’s former Invesco funds into Woodford Equity Income, confident that his track record would continue unbroken. At launch, the fund raised £1.6 billion and grew rapidly thereafter.
Expansion with the Patient Capital Trust
Building on this momentum, Woodford sought to capitalise on investor appetite for more innovative opportunities. In April 2015, he launched the Woodford Patient Capital Trust, a closed‑ended investment trust listed on the London Stock Exchange.
Unlike Woodford Equity Income, which focused on income‑producing equities, Woodford Patient Capital Trust targeted early‑stage and high‑growth companies, particularly in life sciences and technology. Its mandate allowed investment in unlisted businesses, offering retail investors access to ventures typically reserved for institutional capital.
The initial public offering was among the largest investment trust launches in UK history, raising around £800m. Woodford Patient Capital Trust’s structure insulated it from redemption pressures, which the manager said would enable a genuinely patient approach to investing in illiquid assets.
By 2017, Woodford’s two flagship vehicles represented one of the most prominent presences in the UK investment industry. Woodford Equity Income had grown to more than £10bn in assets under management by May 2017, propelled by steady inflows and a low‑interest‑rate environment that heightened demand for income strategies.
Shift in strategy and growing risks
As Woodford Equity Income expanded, its portfolio composition began to change. While the fund retained holdings in well‑known, dividend‑paying UK companies, Woodford increasingly invested in smaller firms and unquoted businesses, some of which overlapped with positions in Woodford Patient Capital Trust.
These moves were driven by his conviction that innovative, disruptive companies offered superior long‑term potential compared with more traditional large‑cap stocks, but was a notable departure from the more conservative positioning that had defined Woodford’s earlier career.
This shift introduced greater complexity as unquoted holdings are harder to value and far less liquid than listed equities. In an open‑ended structure, where investors can buy and sell units daily, the ability to meet redemptions depends on maintaining a core of readily tradable assets.
By 2017, analysts were beginning to highlight concerns that Woodford Equity Income’s liquidity profile no longer matched its investment mandate.
Media scrutiny intensified through 2018. Reports revealed that some of the fund’s unlisted holdings had listed on the International Stock Exchange in Guernsey, thereby technically satisfying listing requirements but offering negligible trading volume. While permissible under existing rules, this practice drew criticism for effectively classifying illiquid assets as liquid.
At the same time, fund performance deteriorated. Woodford Equity Income lagged the FTSE All Share index and other income‑oriented peers, partly due to its limited exposure to rebounding energy and mining stocks and partly due to weakness in its smaller, speculative positions.
Retail investors, accustomed to Woodford’s previous resilience, remained largely patient, but institutional clients and advisers grew increasingly cautious. Outflows began to accelerate as sentiment turned.
In order to meet redemptions, the fund was forced to sell its larger, more liquid holdings. This meant unlisted stocks were becoming a larger part of the portfolio, until it was bumping against the regulatory limit for unquoted equities and adding to investors’ nerves.
Hargreaves Lansdown, the UK’s largest retail investment platform, played a central role in channelling money into the Woodford Equity Income fund. At its peak, more than a third of the fund’s assets were held by investors who accessed the fund through Hargreaves. The platform continued to promote the fund on its influential Wealth 50 list despite emerging concerns about performance and liquidity.
Critics later argued that this endorsement contributed to sustained inflows from retail savers during a period when professional investors were withdrawing. Hargreaves Lansdown defended its position, stating that it had engaged with Woodford Investment Management about the fund’s strategy and was acting in what it believed to be clients’ best interests, but it faced parliamentary scrutiny and reputational damage following the eventual suspension in 2019.
The 2019 crisis
The tipping point came in June 2019. Poor performance, investor redemptions and deteriorating liquidity meant that Woodford Equity Income’s size had fallen to around £3.6bn, down from its peak of £10.1bn.
Kent County Council, a major institutional investor, requested a large redemption from Woodford Equity Income on behalf of its pension fund. This demand coincided with ongoing withdrawals from retail investors and other institutional investors, creating immediate pressure on the fund’s liquidity.
On 3 June 2019, Link Fund Solutions, acting as Woodford Equity Income’s authorised corporate director, suspended trading in the fund. The suspension was designed to allow time for an orderly sale of assets and to prevent forced disposals at distressed prices.
The suspension was intended to provide breathing space for an orderly sale of assets, but it also trapped approximately 300,000 investors – many of whom had relied on the fund for accessible income – who could no longer access their money. The event was unprecedented in scale for a mainstream UK retail fund.
The suspension sparked an intense public and political reaction. Parliamentary committees questioned how a mainstream retail fund had accumulated such a concentration of unquoted and hard‑to‑trade assets. The FCA launched a formal investigation into the decisions leading to the suspension and the adequacy of oversight by both Woodford Investment Management and Link Fund Solutions.
By October 2019, Link concluded that reopening the fund was impossible. The decision was taken to wind up Woodford Equity Income, with assets sold in stages and proceeds returned to investors over several years. On the day of the wind‑up announcement, Woodford resigned from his firm and Woodford Investment Management itself entered a process of closure soon after.
Woodford Patient Capital Trust, though not suspended, faced significant collateral damage. Its share price collapsed to a persistent discount against net asset value, reflecting market scepticism about the valuations of its unlisted holdings. In December 2019, management of Woodford Patient Capital Trust was transferred to Schroders and the trust was later rebranded.
The events of 2019 represented one of the most significant fund management failures in recent UK history. Beyond the financial losses, the collapse prompted a reassessment of how open‑ended funds handle illiquid assets and raised fundamental questions about the effectiveness of regulatory oversight and the responsibilities of authorised corporate directors.
Liquidation and losses
The wind‑up of Woodford Equity Income began in early 2020 and quickly highlighted the scale of the challenge. Many of the fund’s holdings could not be sold on public markets and required lengthy negotiations with specialist buyers. Cash distributions to investors were therefore staggered over multiple tranches, with the first payment made in January 2020.
By 2022, most of the fund’s liquid assets had been realised, but difficult‑to‑value positions remained. Analysts estimated that total investor losses relative to pre‑suspension valuations ranged between £1bn and £2bn. For retail investors – many of whom had invested through ISAs or pensions – the impact was severe.
The protracted liquidation process fuelled criticism of the regulatory framework that had allowed an open‑ended retail fund to accumulate such an illiquid portfolio. Link Fund Solutions faced particular scrutiny over its role in approving and monitoring investment decisions. The FCA’s investigation broadened to examine whether disclosures to investors had been adequate and whether liquidity risks had been properly managed.
The FCA later found that Link Fund Solutions, as authorised corporate director, had failed in its duty to properly oversee the fund’s liquidity and ensure it was managed in line with investor expectations.
Compensation efforts
In April 2023, the FCA proposed a redress scheme for investors affected by Woodford Equity Income’s collapse. The scheme aimed to return up to £235m to those who had suffered losses attributable to governance failures and regulatory breaches, rather than market conditions alone. The funds were to be provided primarily by Link Fund Solutions and its Australian parent, Link Group.
After a lengthy consultation and court approval process, the compensation framework was finalised at the end of 2023. It set out eligibility criteria and the method for calculating payments, with the first tranche scheduled for distribution in 2024. While the scheme could not fully restore investor losses, it marked a significant step toward closure for those affected.
FCA fines and bans
The FCA’s enforcement action concluded in August 2025, when it issued Decision Notices to both Woodford and his former firm. The regulator found that between July 2018 and June 2019, they had made unreasonable and inappropriate investment decisions that left the fund unable to meet redemptions without harming investors.
The penalties were severe:
- £40m fine for Woodford Investment Management
- £5.9m fine for Neil Woodford personally
- Ban preventing Woodford from managing retail funds or holding senior manager roles in authorised firms
Woodford and Woodford Investment Management contested the findings, arguing that the liquidity framework had been designed and overseen by Link Fund Solutions and approved by regulators at the time. They referred the notices to the Upper Tribunal, meaning the fines and bans remain provisional pending judicial review.