Woodford has defended his recent bet on UK housebuilders arguing the country hasn’t built enough houses to meet demand since 1990.
The star fund manager has shirked housebuilders for most of the last 15 years due to a lack of confidence in the outlook for UK growth and concerns about house valuations.
But in the lead up to the UK election, in which Woodford thought the Conservatives would win a large majority, he launched a contrarian bet on the UK economy.
Alongside a stake in Lloyds, Woodford added Barratt Developments, Taylor Wimpey and student accommodation developer, Watkin Jones, construction materials businesses Eurocell and Topps Tiles, real estate businesses British Land, Hansteen, Londonmetric and Sirius Real Estate.
Woodford points out that Labour and the Conservatives both identified housing as a key campaigning topic in the general election, adding that the government has facilitated housebuilders’ cash-generative expansion through policies to build more new homes and make it easier for first-time-buyers to get on the property ladder.
Last week, Neptune UK Mid Cap fund Mark Martin warned equity income funds were “doubling” the bets of their investors, who are often wealthy homeowners, by buying into UK housebuilders in their search for yield.
Martin cautions that political tailwinds could become headwinds if housebuilders’ chief executives continue to line their pockets and the pockets of their shareholders rather than reinvesting that money back into building homes.