NEIL Woodford, one of the best-known fund managers in the City, has backed the under-siege UK pharmaceutical sector with his new fund.
Woodford’s £1.6bn equity income fund, launched last week, has ploughed 8.3 per cent of the fund into Astrazeneca and 7.1 per cent into Glaxosmithkline, the UK’s biggest drug maker, making the companies the fund’s two biggest holdings.
The endorsement of one of the City’s biggest names will provide some comfort to the boards of both companies, which have been under the cosh from markets in recent months
In May, Astrazeneca fended off a £69bn takeover approach from US rival Pfizer – despite shareholder pressure to accept the offer.
Glaxo has also been battling corruption allegations overseas and is currently under investigation by the UK’s Serious Fraud Office.
Woodford’s new portfolio mirrors his signature preference for tobacco stocks, which became a hallmark of funds he ran at former employer Invesco Perpetual.
Woodford has taken stakes in British American Tobacco (6.2 per cent) Imperial Tobacco (5.31 per cent) and Reynolds American (3.55 per cent) with his new fund, putting all three in the top 10 holdings.
Woodford has also taken stakes in safe-and-steady income stocks such as BT, Rolls Royce and Capita, reflecting his cautious outlook.
“My cautious view on the global economy hasn’t changed. The liquidity flows that have supported asset prices over the past five years are going into reverse, while growth in many parts of the world is being downgraded,” he said. “I’ve been using a pilot analogy to explain the process of building the portfolio of my new fund. We have taken off and we have already gained a lot of height, but we are not yet at cruising altitude. The portfolio will continue to evolve.”
Also in Woodford’s top ten is Imperial Innovations, the Aim-listed company which commercialises tech.