A blog post on the fund house’s website, which included comment from the renowned fund manager and his head of investment communications Mitchell Fraser-Jones, said global economic data had been disappointing in March, especially in Europe.
In contrast, Woodford painted a positive picture of the UK economy, stating chancellor Philip Hammond’s spring statement had provided an “upbeat tone”. Manufacturing is growing strongly, the labour market is setting records, inflation is falling and real wage growth is returning for the first time since early 2017, the blog post said.
“There is an increasing possibility that the UK economy could be the fastest growing of all OECD nations by the end of 2018,” Woodford said.
Fraser-Jones described the UK as “bargain basement Britain”, but said that global corporates were becoming more attuned to valuations opportunities with bids for Fenner, Fidessa, Hammerson and Laird being examples of recent deal activity.
The undervaluation of UK equities was due to their lack of popularity with institutional investors, he said.
Despite describing Britain as a bargain, he said Woodford funds had been buying the “very few” valuation opportunities left in the “late-stage bull market”.
Fraser-Jones said the fund house expects real wage growth to progress through 2018 with positive ramifications for household finances and the economy.
Performance
Last week, Portfolio Adviser reported the flagship Woodford Equity Income fund had lost investors money over the last three years.
Its performance over three years is currently sitting at -1%, compared to a 17.6% return in the Investment Association UK All Companies sector, according to FE data. In March, the fund was booted from the IA’s UK Equity Income sector for failing to deliver higher income than the FTSE All Share index over a rolling three-year period.
Fraser-Jones acknowledged the fund manager had suffered a “challenging start to the year”.
However, he pointed to strong financial results in portfolio holdings such as Legal & General, ITV and Burford Capital, as well as pipeline progress at Mareo Biopharma and a new funding round at Oxford Nanopore as reasons for optimism.
“The year ahead poses many macroeconomic challenges but we have positioned the portfolios towards parts of the market that are unloved, undervalued and where sustainable growth prospects are very much under-appreciated,” Fraser-Jones said.
