Barely a week after Woodford teamed up with his new colleagues Portfolio Adviser was able to take him out on the event trail. This is not an arena tour of the UK, but a number of intimate meetings with a select bunch of the UK’s most influential wealth managers.
Early lessons
They quizzed him because they want to know whether their clients should be investing in his new fund that launches on 2 June.
So what have we learned after the first few days?
The first group of financial advisers to meet him, in Edinburgh, were in an optimistic frame of mind. Why wouldn’t they be? The gathering coincided with buoyant news about the British economy, growing at its fastest rate for almost four years, while the FTSE100 has been riding high.
But Woodford is known for his strong and often contrarian views and it was clear from the off that while it may be a new company, it was the same Woodford.
The 'concensus mistake'
He was quick to rebuff any notion that the UK’s economy is on the mend. Markets have risen across the board mainly thanks to the stimulus from the central banks in the form of QE over the past few years. In short he said, the UK’s economy is a recovery “based on shallow and weak foundations”.
Exports are low and investment is falling, and without investment, wages won’t grow. The “consensus mistake”, he warned, is to expect interest rates and bond yields to rise soon. "They won’t", according to Woodford.
Interest rates will stay lower for longer, perhaps for another two to three years, which is not what most people are anticipating. Investors will have to be more vigilant in where they invest to generate decent returns in the years ahead because the easy money has been made.
All bar one…
Famed for shunning the banks in the lead up to the financial crisis, Woodford continues to be pessimistic for the sector, bar HSBC, which he believes is undervalued but has better long-term prospects than its rivals. Many of the banks have been supported by the Government simply because it is not in its interest for them to fail, but this support masks the reality, he says no holds barred.
Their balance sheets are a long way from repair and they have yet to be cleansed from their legacy problems – they will “not turn into dividend-paying machines any day soon”.
Woodford is back and he is not pulling any punches.
