Ex-Invesco star Woodford's start-up bets on tobacco, drug firms

LONDON, July 7 Sun Jul 6, 2014 7:00pm EDT

LONDON, July 7 (Reuters) - Star British fund manager Neil Woodford, who left Invesco Perpetual in April to start his own firm, is beginning his new role with a focus on tobacco and drug stocks, believing they can withstand what he expects will be a faltering global economy.

Woodford built a strong following after managing money for more than 25 years at Invesco, including the $22 billion Invesco Perpetual High Income, Britain's largest equity fund.

In his first portfolio disclosure after he started managing money for Woodford Investment Management last month, the fund manager said the liquidity flows that have supported asset prices over the past five years were going into reverse, while growth in many parts of the world was being downgraded.

"I have been very careful in building a portfolio that avoids sectors that I believe are vulnerable to a faltering global economy," Woodford said in a statement.

"There is significant emphasis in my new fund on the tobacco and pharmaceutical sectors. These two sectors are resilient to falling demand, have strong balance sheets and attractive valuations," he added.

Woodford's top bets at the end of June included AstraZeneca Plc, GlaxoSmithKline Plc, British American Tobacco Plc and Imperial Tobacco Group Plc.

His new fund, which focuses on companies offering "sustained dividend growth", also disclosed investments in Rolls-Royce Holdings Plc and Imperial Innovations Group Plc.

Investors pay close attention to bets of high-profile fund managers such as Woodford, who also committed to disclose all the holdings of his CF Woodford Equity Income Fund on a monthly basis. Most funds usually only disclose top-10 bets.

For over 25 years under Woodford, the Invesco Perpetual High Income Fund gained more than 2,200 percent, according to data from fund tracker Thomson Reuters Lipper. By comparison, the FTSE All-Share Total Return index rose 868 percent.

Woodford stopped managing the fund in March this year and moved on to start his own firm.

His new venture got off to an auspicious start with asset management firm St James's Place announcing earlier this year that it was ending 7.7 billion pounds worth of investment mandates with Invesco Perpetual and would allocate nearly half of that to Woodford. (Editing by Mark Potter)

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