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Leading Fund Manager Bearish On Uk Property

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Interview with Invesco's Neil Woodford in today's Sunday Times Money section :

Star manager reveals secrets of his success

In the first of a four-part series of interviews with Britain’s foremost fund managers, Money Editor Kathryn Cooper talks to Invesco Perpetual’s Neil Woodford...........

NEIL WOODFORD, manager of Invesco Perpetual’s top- performing Income and High Income funds, has never been afraid to defy the rest of the industry, and his latest bugbear is the common mantra that investors should always have a “diversified” portfolio.

Woodford rails against the advice that savers should always spread their money across cash, bonds, equities, property and commodities. He denounces this as “rubbish”, especially because he believes property is overvalued.

“I think a lot of rubbish is talked about diversification of returns,” he said.

“For a long time property has been a great investment, but when I look at popular markets I see an overvalued asset and I wouldn’t be surprised if property underperformed virtually every other asset for a very long time — perhaps 10 years.

..........Woodford is one of the best-known “contrarian” investors in Britain — in other words, he is prepared to take views that are out of line with the rest of the market on the basis that he will be proved right — eventually.

“Investors must have a clear perspective on where their views diverge from common consensus,” he said. “This is because I don’t think managers can beat the market by simply adopting a consensus view. I don’t see how you can justify charging savers for that strategy because it involves no intellectual effort — all you do is identify what is going up and hope you are not the last fool in.”

..........At present Woodford is more bearish than his peers about the outlook for the global economy, consumer spending and the housing market.

“I have been cautious about the outlook for the global economy for about two years and while I have been wrong so far, because I have been surprised by the resilience of consumers in the face of higher interest rates, I still think we will see a slowdown,” he said.

“Consumers’ incomes are being constrained by rising utility bills, higher taxes and higher interest rates and, to a certain extent, greater job insecurity, which will all conspire to create a more difficult economic environment where growth is still positive, but much more prosaic.”

This spelt bad news for the housing market, Woodford said, and he was dismayed by the rush to launch commercial and residential property funds. Over the past few months, First State, Fidelity and Schroders have all launched schemes.

“The belief that property — residential and commercial — always goes up, even when it is as overrated as I think it is today, is a very dangerous assumption,” he said.

Times online

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  • 343 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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