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Woodford doubles down on Brexit bet as deadline looms

Woodford doubles down on Brexit bet as deadline looms

Neil Woodford has invested in large financial firms in a sign the embattled fund manager is doubling down on his upbeat Brexit prediction.

The half-year results for his Income Focus fund, published at the end of September, showed Mr Woodford bought shares in a range of FTSE100 companies during the six months to July 31 including Lloyds Banking Group, Royal Bank of Scotland and Legal & General.

Mr Woodford invested £2.76m in Lloyds and £6.89m in RBS in the half-year period, despite the fact banks are likely to struggle if the economy takes a hit in a no-deal Brexit scenario.

This is in line with his original prediction that the UK economy would continue on the same positive trajectory in 2019 even with a no-deal Brexit.

Last December Mr Woodford took the opportunity to buy shares in companies that had fallen in value as a result of the market’s fears about possible Brexit consequences.

At the time he thought Brexit would be similar to the Millennium Bug — when the world worried about the impact on technology of the calendar turning to a new millennium in 2000 and nothing happened.

The half-year results also showed Mr Woodford invested in property companies — a total of nearly £15m split between Purplebricks and Raven Property — and bought £13.6m of shares in a regional real estate investment trust.

The property sector is also reliant on the strength of the UK economy so could struggle if the impact of a no-deal Brexit scuppers consumer confidence and stalls the market.

But Woodford's Income Focus fund has not fared particularly well in recent times, falling 23 per cent over the past year compared with a gain of 0.22 per cent for the average fund in the IA UK Equity Income sector in the same time period.

Mr Woodford’s Income Fund was created to have a higher yield than the now suspended Equity Income fund.

FTAdviser understands the fund manager is taking the same approach and investing in similar FTSE 100 companies for his suspended fund.

Neil Woodford was forced to suspend his Equity Income fund on June 3 after investors pulled around £9m per working day from the fund in May.

He is now battling to sell shares to preempt a predicted wave of redemptions when the fund opens, expected to happen at the start of December.

By investing in FTSE 100 firms, Mr Woodford is ensuring he can sell the shares quickly if a large number of investors pull money from the fund at the end of the year.

imogen.tew@ft.com

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