Invesco Perpetual’s Woodford: Sell-off was no surprise

Neil Woodford, star manager at UK-based Invesco Perpetual, said he has been completely ‘unsurprised’ by the market sell-off and is no more concerned about the macro outlook than before the recent period of hightened volatility.

The Invesco Perpetual Income and High Income manager, responsible for around £18bn AUM, said the recent share price volatility has centred on weak economic growth – something he has been preparing his portfolios for over time – and the ongoing sovereign debt crisis in Europe.

“A prolonged period of consumer austerity and low economic growth for the UK now looks inevitable. The recent sell-off in equity markets confirms that the stock market was not expecting this.

“Is this tougher outlook a surprise to us? Absolutely not – we are only surprised the consensus has taken so long to recognise and digest these economic headwinds and we are no more concerned about the macro environment than we were previously,” he said in Chelsea Financial Services’ latest Viewpoint magazine.

He added his funds had been positioned for a low growth environment for some years, avoiding stocks reliant on growth in consumer spending and UK economic output.

It has been well documented Woodford favours pharmaceuticals, where 26.5% of the High Income fund is invested, and tobacco stocks as positions that will grow in spite of the weak economic climate and in fact have been made more attractive by market movements.

“The recent dramatic sell-off has been indiscriminate and, we believe, provides us with attractive opportunities to invest for the long term,” Woodford said.

He continues to avoid banks which he said still face a “challenging environment” where they will have take hits in profitability to improve their financial position. They will also have to recognise further losses in bad debts and deal with a more onerous regulatory environment, the manager warned.

 

This article was first published on Investment Week

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