April roundup

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Mitchell Fraser-Jones 1 May 2018 Est. reading: 9 min read

Home > Words > Insights > April roundup

April Roundup

Mitchell Fraser-Jones
1 April 2018

Global economic fundamentals are now evolving in a direction that the market is surprised by and the crowded consensus is being called into question more and more. I am increasingly confident that the market’s mood is changing in a way that is very supportive for our long-term investment strategy.

– Neil Woodford

April was a positive month for equities, with most major regional stock markets posting strong gains. Within the mix, the UK stock market outperformed most other indices, bucking the recent trend in which the UK’s unpopularity with global asset allocators has weighed on returns.

The Pronto trial readout from Prothena was clearly a disappointing development during the month. Elsewhere, however, there have been a number of positive events, from a macroeconomic and stock specific perspective, which provide further encouragement on the outlook for performance from here.

The Bigger picture

Source: Lazarus, as of Feb 2018Source: ONS, as of Feb 2018Source: Lazarus, year-on-year,to the end of 2017Source: Lazarus, as of the endof 2017yearssince the government last posteda current budget surplus3Total retail saleshigher than last yearjob vacanciesIncrease in overall employmentsince December 2017214123“GDP is very hard to measure and isfrequently revised. The Office forNational Statistics was recentlyrevising UK GDP numbers from 10years ago. I believe that last week’s Q12018 GDP number will be revised upover the rest of the year but, in themeantime, here’s some numbers that Ithink more accurately reflect what’sreally going on in the UK economy.”of outstandingmortgages areon fixed rates43in consumer spendingyear-on-year3"Even if the Bank of England increasesofficial interest rates in May (whichnow looks much less likely), mostmortgage holders will not be affected."
“GDP is very hard to measure and isfrequently revised. The Office forNational Statistics was recentlyrevising UK GDP numbers from 10years ago. I believe that last week’s Q12018 GDP number will be revised upover the rest of the year but, in themeantime, here’s some numbers that Ithink more accurately reflect what’sreally going on in the UK economy.”4of outstandingmortgages areon fixed ratesin consumer spendingyear-on-yearIncrease in overall employmentsince December 2017212343Source: Lazarus, as of Feb 2018Source: ONS, as of Feb 2018Source: Lazarus, year-on-year, to the end of 20173Total retail saleshigher than last yearsince the government last posteda current budget surplusSource: Lazarus, as of the end of 2017job vacancies1"Even if the Bank of England increasesofficial interest rates in May (which nowlooks much less likely), most mortgageholders will not be affected."

Patient Capital Trust case studies

With the release of the Woodford Patient Capital Trust annual report for 2017, we have provided a series of case studies, to demonstrate the encouraging progress being made across much of the portfolio. Case studies are available for the companies listed below, along with Neil’s portfolio manager’s review.

Conclusion

Our strategy has been out of step with the stock market view for some time now, however, as The Bigger Picture content demonstrates, we are seeing a number of macroeconomic developments that are increasingly calling into question the consensus view.

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You should note that capital is at risk with these investments and you may get back less than you invested. The value of the fund or trust as well as any income paid will fluctuate which may partly be the result of exchange rate changes.

The price of shares in the Woodford Patient Capital Trust is determined by market supply and demand, and this may be different to the net asset value of the trust.

The Woodford Patient Capital Trust currently intends to conduct its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

Young businesses have a different risk profile to mature blue-chip companies – risks are much more stock-specific, which implies a lower correlation with equity markets and the wider economy. Long-term outcomes are more binary – extremely attractive rewards for success but some businesses will inevitably fail to fulfil their potential and this may expose Woodford Patient Capital Trust investors to the risk of capital losses. As it can take years for young businesses to fulfil their potential, this investment requires patience.

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

The Woodford Funds (Ireland) ICAV (the “Fund”) has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland. The Fund’s Swiss paying agent is Neue Helvetische Bank AG. All fund documentation including, Prospectus, Key Investor Information Documents, Instrument of Incorporation and financial reports may be obtained free of charge from the Swiss Representative in Lausanne. The place of performance and jurisdiction for all shares distributed in or from Switzerland is at the registered office of the Swiss Representative. Fund prices can be found at www.fundinfo.com.

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