What Brexit means for investors: Neil Woodford looks beyond short-term uncertainty
Fund manager Neil Woodford has played down the longer term significance of Brexit on the economy, urging investors to “look through this period of uncertainty”.
“Markets are clearly shocked by the decision but, in our view, it is not as negative a development as the market’s initial reaction appears to imply,” he said on Friday morning.
He acknowledged that there will be short-term challenges. Nearly £100bn was wiped off the FTSE 100 this morning.
“Clearly, on a day like this, markets have responded negatively to the uncertainty that follows this vote, and may continue to do so for some while,” he said.
“However, my job is to peer through this short-term uncertainty and focus on the long-term fundamentals of the economy and the businesses in which we invest.”
Woodford suggested UK GDP will be lower for the next 18 months than it would have been if Remain had won the vote.
He said: “In the longer term, it is my view that the trajectory of the UK economy, and more importantly the world economy, will not be influenced significantly by today’s outcome. Consequently, the portfolio strategy will not change. It was designed for a challenging world, characterised by low growth, deflation, debt problems, weak productivity and troubling demographics. Despite these headwinds, I remain confident that the portfolio will deliver the returns we have targeted over the three-to-five year time horizon that we continue to focus on.”
Read more: UK economy on course for investment boom after EU referendum
Woodford added: “Although market conditions such as these can be unsettling, we would strongly urge investors to look through this period of uncertainty and focus on the long-term opportunity which, in our view, continues to remain attractive.”
Reacting to Brexit this morning, the Investment Association said: "The focus in the short-term will be on how markets respond, but it is important that we adopt a collective long-term focus on how the UK can preserve the pre-eminence of its financial services sector including our highly successful £5.5 trillion asset management industry – the second largest industry of its kind in the world…
"The Investment Association is confident our industry will be able to continue to compete overseas, both in the EU and the rest of the world. Our objective remains to play a positive role within the UK economy as a source of funding for companies, a major contributor to export earnings and as a centre of investment excellence that serves both domestic and overseas clients successfully."