Neil Woodford can “see beyond the noise of the stockmarket and identify where real value lies”, says Mark Dampier of Hargreaves Lansdown in The Times. With more than £7.4bn under management at his Invesco Perpetual High Income fund, he is the UK’s most powerful fund manager. Citywire says he has justified his AAA rating with a “staggering record of consistency”, achieving a 96.7% return against the 67.3% sector average over the last three years.
Woodford ignored tech-stock hype in the 1990s and was proved right when he kept faith with tobacco, despite bad publicity surrounding the sector. So investors should be interested to learn that he has taken a very defensive position this year, as Justin Modray of Bestinvest tells the International Herald Tribune. Utilities make up more than 25% of the fund – National Grid, Centrica and Drax Group are among his largest holdings. Dampier is concerned about the health of the UK economy, increasing his exposure to FTSE 100 stocks, which derive more of their earnings overseas than smaller UK firms. He is particularly worried about the UK’s debt mountain, and has dropped banks stocks from his portfolio.
One sector he is reconsidering is oil. “I’ve not held oil in a long time,” he tells The Guardian, but after recent price falls, he sees “a lot of value in oil majors BP and Royal Dutch Shell”. On tobacco, he is still bullish; rising demand in emerging markets compensates for the 2%-3% annual sales fall in Britain, he says.
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Invesco Perpetual High Income fund top ten holdings
Name of holding % of assets
Reynolds 5.6%
British American Tobacco 5.0%
National Grid 4.7%
Centrica 4.5%
BP 4.3%
BT Group 4.1%
Imperial Tobacco Group 3.8%
GlaxoSmithkline 3.3%
Vodafone Group 3.3%
Drax Group 2.8%