London: UK money manager Neil Woodford says he’s “weirdly” bullish about Britain’s economy and sees more value in the equity market than he has in a long time.

The £16 billion (Dh73.46 billion; $20 billion) fund manager has shrugged off the impact of Brexit and the “poor” performance of his flagship fund last year to launch what he says is his third and final UK equity fund since leaving Invesco Perpetual in 2014 to start his own firm.

“I see an opportunity that other fund managers don’t see at the moment,” Woodford said at a press event in London’s Soho district on Thursday. “I had a very poor 2016 but I am seeing more value in the stock market than I have in a long time. I have a more bullish stance because I’m seeing the opportunity.”

While his investors were “frustrated” with last year’s performance, most kept their money with Woodford Investment Management, he said. The £12 billion CF Woodford Income Fund fell to the bottom 14th percentile among his peer group in 2016, largely as a result of avoiding mining companies and banks — two industries that led a market rally.

“Many stocks that I look at were in a bear market last year,” Woodford said. “A lot of companies focused on the domestic economy have fallen dramatically — Next Plc is an extreme example of that.” The fund manager topped up his holdings in the retailer after the shares slumped on a profit warning.

Better prospects

Woodford is yet to disclose the holdings of the new fund but said investors can expect an overlap with his existing portfolio, which is heavily invested in tobacco and health care companies.

While he declined to say whether banks will be included, he said the sector had become more “investible” as credit growth returns. He stuck by his 2014 decision to sell HSBC Holdings Plc, calling Britain’s biggest lender “an unappealing investment.”

The fund is targeting an income of 5 pence per share in 2018 and will stick to around 50 mainly UK publicly listed companies. It can also invest in overseas companies above the usual 20 per cent that’s imposed on UK equity income funds, though Woodford said he’s unlikely to go above that threshold.

We think the new fund can “deliver high single-digit returns and we’re confident that we can deliver that over three to five years,” Woodford said.

— Bloomberg