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Neil Woodford: 'frenetic' market rise won't last
Woodford tells investors not to expect his Invesco High Income portfolio, or the wider market, to maintain their recent pace of gains.
Neil Woodford, manager of the popular Income and High Income funds at Invesco Perpetual, has warned investors that the frenzied market rise of the past year is unlikely to last.Woodford, one of the most influential investors in the UK, has told investors not to pin their hopes on a continued rise in stocks or his High Income portfolio, which over the 12 months to the end of August has returned 19.5%, versus a rise of 16.3% by the FTSE 350 Higher Yield TR Index.
Woodford said that while he remained confident that his £14 billion fund would deliver over the longer term, he did 'not expect the portfolio or market to appreciate at the frenetic pace of the last year'.
He urged investors not to get too excited about the UK economic recovery: 'The UK stock market's rise of the past year has not been matched by a commensurate improvement in the economic outlook - and we anticipate that it is likely to remain volatile in the near term as it adjusts to the likely withdrawal of extraordinary monetary policy, at least in the US,' he argued.
Other investors have been much more upbeat, with a recent Bank of America Merrill Lynch survey of fund managers showing allocation to UK shares at an all-time high, amid expectations of a sustained economic recovery.
In common with other investors Woodford said he was also cautious about financial conditions in China 'and the slowdown that is evident across much of the emerging world'.
Shares in the emerging world have suffered particularly badly amid fears about the impact of the US Federal Reserve beginning to scale back its monthly stimulus scheme. The Fed unexpectedly chose to keep on spending $85 billion a month on bond purchases at its recent September meeting.
Reviewing the company holdings in his High Income fund – a Citywire Selection pick – Woodford said that there had been 'a recurring theme of tough trading conditions across Europe'.
He singled out distribution and outsourcing group Bunzl (BNZL.L) for praise, pointing out that company had produced a 'robust set of results, despite challenging conditions in Europe, and reinforced its confidence with a 14% hike in its dividend.'
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