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Woodford: this 'frenetic' rise won't last
by Sarah Miloudi on Sep 24, 2013 at 10:13
Neil Woodford, head of investments at Invesco Perpetual, has warned investors the frenzied rise in markets is unlikely to last.
In recent weeks alone, the FTSE has jumped on the back of a more dovish Janet Yellen looking set to become the next Federal Reserve chair, and following current leader of the central bank Ben Bernanke's decision not to taper.
Year on year Britain's blue chips have also made healthy progress, rising 11.1% as domestic economic data has recovered.
However Woodford, known for adopting a defensive stance and his caution paying off, 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 his £14 billion Citywire Selection fund would deliver, he said he did 'not expect the portfolio or market to appreciate at frenetic pace of the last year', He urged investors not to get too excited about the recovery story, which earlier this month was bolstered by another strong batch of manufacturing figures.
'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.
Woodford (pictured) said he was also cautious on the outlook for China, which a number of top investors have been voicing concerns about, along with the broader basket of emerging markets.
In both regions, growth has slowed and investors can no longer expect the double digit gains they have become used to in recent years.
Emerging market currencies are also proving problematic, with the likes of the Indian rupee sliding to a record low, albeit partly due to fears over the Federal Reserve's plan to ease back on stimulus, which after its meeting on September 17 and decision to postpone tapering dimming this risk.
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