Woodford “well-positioned” despite continued slump

Added 17th February 2017

Neil Woodford’s Equity Income Fund is still “well-positioned” to deliver attractive long-term returns, despite trailing the UK market in January, his firm said in an update for investors.

Woodford “well-positioned” despite continued slump

Woodford

Woodford IM pointed to poor results from clothes retailer Next and drugs company AstraZeneca as hitting the flagship fund’s performance in the early days of 2017, continuing its less-than-stellar performance last year.

However, despite the disappointing results, the fund used the low share prices at both Next and AstraZeneca to increased its holdings in them and also added to its position in Horizon Discovery, Paypoint and Idex.

The poor monthly performance comes after a disappointing 2016 for the £9.5bn fund which underperformed the IA Equity Income Sector with returns of just 8.96% over the year against the 17.16% average sector returns.

However, head of investment communication Mitchell Fraser-Jones, said he is confident the fund is “well positioned to deliver attractive long-term returns”.

Looking ahead, Fraser-Jones said: “We remain cautious on the outlook for the global economy. We remain sceptical about the notion of imminent ‘reflation’ which has gripped financial markets in recent months and dominated market behaviour. Previously, we have set out why we are not convinced about the impact that President Trump will have on growth, but we are also concerned about the market’s apparent optimism on China.”

A new addition to the portfolio was Honeycomb Investment Trust, a UK-based specialist lender servicer small and medium enterprises while the portfolio’s tobacco holdings made the largest positive contribution to returns.

Fraser-Jones added: “As long-term investors, we remain concerned about the deflationary consequences of that eventuality. Consequently, we remain focused on businesses that are more in control of their own destiny and capable of delivering growth in the challenging economic environment that we continue to foresee.”

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Louise Hill

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Louise joined Portfolio Adviser in December 2016 as one of the editorial team’s news reporters based in London. Originally from Liverpool, she is an NCTJ-qualified journalist and began her career in 2014 working on local newspapers.

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