In its November update, Woodford IM revealed the fund had delivered a negative return and “marginally” underperformed against the UK stock market over the month, due in part to struggling tobacco stocks which proved vulnerable as markets hit back at so-called bond proxies.
However, Neil Woodford’s firm argued it was not an appropriate reaction to the moves seen in bond markets and remains convinced tobacco stocks deliver strong long-term returns to investors, and moved to strengthen its position in Imperial Brands and British American Tobacco.
Two other underperformers in November were AstraZeneca and GlaxoSmithKline, both of which fell for “no fundamental justification”, the report said, before adding that it had taken advantage of this “unjustified share price weakness” to add to its position in AstraZeneca.
It also added to its holdings in in energy firm Drax and infrastructure play Stobart’s at what it believes were “very attractive valuations”.
Some of the strongest performers were the firm’s US pharmaceutical and biotechnology holdings which rose on the back of the US electorate’s decision to back Donald Trump as the next president.
“In terms of outlook, we continue to believe that the portfolio is appropriately positioned for the current environment, based on what we expect to unfold in the years ahead. As such, we are absolutely confident that the fund is well-placed to deliver very attractive returns over the next three-to-five years,” the firm said.
“This has, however, been a challenging year for the fund’s performance. Given our fundamental long-term approach, we expect our investment strategy to underperform in certain market conditions but, at the same time, we appreciate that the experience can be discomforting for some investors.”
The fund reduced its exposure to the insurance company Hiscox after share prices increased and reinvested it into new opportunities with stronger valuations such as life insurance firm Aviva, comparing its good management and attractive valuations to the likes of Legal and General.
Woodford also invested in a newly-formed, unquoted business with “significant growth potential” called Accelerated Digital Venture (ADV).
