View the article online at http://citywire.co.uk/money/article/a598623
Neil Woodford: policy makers aren't getting close in Europe
Policy makers are not even close to solving the problems in Europe, Neil Woodford of Invesco Perpetual fears, and this could lead to a lingering recession across much of the region.
Policy makers are not getting close to solving the problems in the eurozone and their actions so far could lead to a recession that lingers into 2013, Neil Woodford has warned.
Woodford, head of investments at Invesco Perpetual, has been positioned for a challenging environment for several years, and told investors he continues to remain cautious on the eurozone, where politicians are struggling to find a solution to the sovereign debt crisis.
'Nothing that we have seen from policy makers thus far, we believe, comes close to solving the issues that exist within the eurozone,' Woodford said in his monthly update. 'In our opinion, the current policies are likely to result in a recession for much of the region throughout most of 2012 and possibly 2013.'
Greece, where a pro-austerity and pro-bailout coalition has now been elected, is in its fifth year of recession.
Meanwhile, the UK fell back into recession during the first quarter of the year, when the growth rate took a sharp 0.2% tumble. Additionally numbers from Germany, once the strong arm of the single currency zone, have today shown its business climate continued on the downward trend it began last November, while its debt/GDP ratio stands at a staggering 80%.
Woodford has maintained the positioning of his High Income fund, a pick of Citywire Selection, preferring to back cheap defensive blue chips, particularly those in the pharmaceutical and tobacco sector, despite recent concent about the latter.
He said: 'The current bout of concern over the eurozone has not necessitated any changes to the strategy we have in place. We continued to focus our portfolios on what we believe to be fundamentally cheap companies, many of which are defined as "blue chips" and where we believe valuations continue to underestimate their ability to grow through a prolonged period of economic stagnation.'
Over the course of the year this strategy has paid off for Woodford, even though he admits he was caught out by the profits warning from Tesco (TSCO.L), which he previously considered defensive. Since May last year the fund has returned 2.2%, compared to a fall of 8% in the FTSE All World Total Return Index.
News sponsored by:
Making the most out of Europe's potential means seeing things differently. Learn more about how BlackRock's focused approach to investing in Europe helps investors unlock the continent's vast potential.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the funds
Look up the shares
Look up the fund managers
More from us
- Tobacco stocks: time to kick the habit?
- Smart Investor: is Imperial Tobacco the ideal income stock?
- Tesco UK sales continue to fall
- Neil Woodford: 5 stocks I bought with Tesco money
- Chart of the Day: will you walk by 'pedestrian' Tesco?
- Tesco profit warning shows vulnerability of defensives, Steve Cordell says
- UK recession deeper than first estimated
- Week Ahead: ways the eurozone could be fixed
- Citywire Money: best investment funds
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.