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Woodford sees dark waters ahead as he starts 16th year at helm of income fund

Neil Woodford says there are signs that the UK economy is slowing, as he marks his fifteenth anniversary of running Invesco Perpetual’s income fund.

The star fund manager says there is mounting evidence of a consumer slowdown in the UK. However, the Bank of England’s monetary policy committee is unlikely to cut interest rates again while inflation is above trend unless there is a further significant economic slowdown.

Woodford’s economic outlook for 2006 is therefore pessimistic but he believes that several UK companies remain insulated from rising economic pressures.

With reinvestment of net income, 1,000 invested in the income fund in October 1990 would now be worth 8,755.83.

Woodford’s long-term, valuation-focused approach has returned 68.5 per cent since 2000, ranking him top decile through the bear market.

Woodford says: “The economic environment for the UK equity market has clearly become more difficult over the last nine months and, looking forward into 2006, these difficulties are likely to continue.

“Nevertheless, there are many UK companies which for different reasons are well insulated from these more challenging economic conditions and many of these are also clearly undervalued.”

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