Neil Woodford has said the "stress" in emerging markets is proving his view of the world economy right.
The fund manager has positioned the funds he manages for a steep slowdown in global growth, with the UK to be a "shining light".
He said: "In the UK, the labour market is strong, we have record job vacancies, investment spending is growing, government finances are improving and we’re seeing growth in bank lending – the recent numbers reflect a UK economy that is performing much better than was forecast."
Mr Woodford said the strong US dollar meant emerging market economies were experiencing severe "stress" and this was feeding into asset prices, which he expected to continue.
He said most of the companies held in his portfolios had performed positively, but this was not being recognised by the market.
An update from Woodford Investment Management said: "The market has remained reluctant to reward this operational progress with higher share prices, particularly for domestically-focused businesses. We are confident that will change in time, but something else is already changing.
"Weakness from the share prices of companies not held in the Woodford portfolios is becoming increasingly evident, as signs of economic stress continue to build, particularly in emerging markets.
"We expect this to continue and remain very confident that the funds are well-positioned to deliver attractive long-term returns, despite the more challenging global economic environment that we foresee."
For UK investors, mining and oil company shares were among those which perform badly when emerging markets are in peril. Mr Woodford avoided holding those and instead built positions in UK banks and housebuilders, which should perform well if the UK economy does well.
Mr Woodford has been much more positive on the outlook for the UK economy than his peers, which has hit the performance of his Woodford Equity Income fund.
But this fund has performed slightly better in recent months, being among the top 50 per cent of funds in the IA UK All Companies sector over the past three months, and delivering a positive return on a six month basis.
But that hasn’t stopped the exodus of capital from the mandate, which has now shrunk to £5.8bn, having been more than £10bn at its peak.
According to data from FEAnalytics, Woodford Equity Income as returned 1.4 per cent over the past three years, compared to the 31.5 per cent returned by the IA UK All Companies sector.
But over the past three months Mr Woodford's flagship fund has outperformed the sector, losing 0.6 per cent compared to a loss of 1.3 per cent for its benchmark.
Anna Stupnytska a global economist at Fidelity International, said the global economy was "running out of steam".
She said troubles in China and Turkey could "spill over" and bring the pace of global growth downwards.
Philip Milton, of PJ Milton and Co, an advice firm in Devon, said he has not invested in Woodford funds in recent years as he prefers not to invest in very large funds, because he believes performance is impaired when that happens.
david.thorpe@ft.com
