July roundup

Important Information

We want to make investing with us simple and straightforward for all of our clients.

Please select your investor type from the options below.

Alternatively you can register or log in to an existing account.

Please note that by making your selection here you are agreeing to the Woodford Investment Management Ltd Privacy Statement and to our Terms and Conditions.

Mitchell Fraser-Jones 2 August 2018 Est. reading: 6 min read

July Roundup

Mitchell Fraser-Jones
2 August 2018

“The global growth slowdown is most obvious in China and in emerging economies where stresses are beginning to become very visible. For example, the fall in emerging economy currencies and in particular, the weakness of the Renminbi, are the clearest guide to economic stress.”

– Neil Woodford

The UK equity market continued to make positive overall progress in the month of July, despite growing evidence that the economic backdrop is becoming increasingly challenging. The global economy is slowing, most obviously in China, emerging economies and continental Europe. The US is clearly benefiting from the Trump tax cuts but policy error looms in the second half of 2018. The UK economy, meanwhile, continues to confound consensus. Growth here is accelerating and, contrary to much of the rest of the world, the UK’s economic fundamentals are improving.

The Bigger picture

Read more of our latest ‘Bigger picture’ thoughts here

Chinese credit creation since the financial crisis eclipses that of the rest of the world

Source: Citi Research, National central banks, Woodford

Note: US series contains bank credit only

Clients often ask, if we are right on China, why does this have any relevance to the Woodford funds and, in particular, the significant exposure to the UK economy?

China’s economic outcomes will have an effect on the UK economy, but this is likely to be muted. Where China’s economic performance will be felt more dramatically, of course, is in the businesses that interact with what China buys and sells and those that have invested in the economy directly. This is, of course, therefore very relevant to some of the UK’s largest businesses (index constituents) in the oil, mining, luxury goods and financial services sectors.

It is worth reiterating here, that the UK economy and the UK stock market are two very different beasts. There are 2.5m non-financial companies in the UK – just 1% of them are foreign-owned. Companies in the FTSE 100 employ just 3m people in the UK out of a workforce of 33m. As a result, although China’s influence on the UK economy is relatively small, it’s influence on the UK stock market, is profound.

So, China is most relevant to what we don’t own in the portfolios. Clearly, all of this is more pertinent to the performance of the funds from a relative perspective. However, there is an important characteristic of momentum-driven pricing in asset markets, which is that, whilst the crowd rushes towards a part of the market that everyone wants to own, they are always deserting another.

Given this yin and yang nature of momentum-driven market inefficiency, there is an absolute perspective too – it creates valuation opportunities for active fund managers to exploit. In the current environment, this explains the valuation opportunity in UK-exposed businesses, which the funds are positioned to exploit.

Register for updates

Register now to receive roundup alerts by email.

What are the risks?

  • The value of investments and any income from them may go down as well as up, so you may get back less than you invested
  • Past performance cannot be relied upon as a guide to future performance
  • The ongoing charges figure is charged to capital, so the income of the funds may be higher but capital growth may be restricted or capital may be eroded
  • The funds may invest in other transferable securities, money market instruments, warrants, collective investment schemes and deposits – some of these security types could increase the funds’ volatility and increase the level of indirect charges to which the funds are exposed
  • The funds and trust may invest in overseas securities and be exposed to currencies other than pound sterling – as a result, exchange rate movements may cause the sterling value of these investments and the income from them, to fluctuate
  • The LF Woodford Income Focus Fund will be invested in a concentrated portfolio of securities – the fund is not restricted by reference to any geographical region, sector or market capitalisation
  • The LF Woodford Equity Income Fund and the Woodford Patient Capital Trust may invest in unquoted securities, which may be less liquid and more difficult to value, because they are generally not publicly traded – the lack of an open market may also make it more difficult to establish fair value
  • 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. This means the price may be volatile in response to changes in demand
  • 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 investors to the risk of capital losses
  • 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 – it can take years for young businesses to fulfil their potential, this investment requires patience

Important information

Before investing, you should read the Key Investor Information Document (KIID) for the fund – or Key Information Document (KID) for the trust – and the Prospectus which, along with our terms and conditions, can be obtained from the downloads page or from our registered office. If you have a financial adviser, you should seek their advice before investing. Woodford Investment Management Ltd is not authorised to provide investment advice.

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.

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.


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.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

Are you sure?

By disagreeing you will no longer have access to our site and will be logged out.

Privacy Preference Center

Experience Tracking

Lets our analytics service track you across our different websites and enables data sharing among our different marketing tools.

AMCV_[Tracker ID]@AdobeOrg (Adobe), [Tracker ID]@AdobeOrg (Adobe)
Adobe Analytics (helps us provide you with more relevant experiences and content based on your likely interests). Cookies: demdex, dextp, dpm, DST, DSTJS
Twitter personalisation (by better understanding how devices are related, Twitter can use information from one device to help personalize the Twitter experience on another device). Cookies: personalization_id
Heap Analytics (provides metrics on user behaviour and actions throughout the site). Cookies: _gid, _hp2_id.[Tracker ID],_hp2_props.[Tracker ID], _ga, _mkto_trk, optimizelyBuckets, optimizelyEndUserId, optimizelySegments, raygun4js-userid, _attribution_referrer, _csrf
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: _tmae ,ev_sync_dd,ev_sync_yh,everest_g_v2,gglck

Traffic Metrics

Allows Woodford to aggregate information on website usage and popular content

_ga, _gid
Google Analytics (tracks and reports website traffic and user behaviour): Cookie: CONSENT
New Relic (application and server performance monitoring – allows us to spot problems with our website code and improve them to keep things running smoothly). Cookie: JSESSIONID
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: __qca,__smToken, _ga, _mkto_trk, _rtbmedia

Search History

Populates the 'recent searches' section of the website navigation.


Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?