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Woodford: Aggressive sell-off in equities almost over

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Investors are “in the teeth” of a severe sell-off – but one which may be over relatively quickly, according to equity income manager Neil Woodford.

Thursday saw the FTSE 100 slide another 0.3 per cent following its worst-one day fall in 16 months on Wednesday, leaving the index down 8.8 per centin a month.

Global indices have followed a similar path, with the S&P 500 down 6.8% in the US in the last month, and Germany’s DAX down 10.9 per cent.

Asian equity markets have not escaped unscathed, with the Nikkei also off 8.5%, and Hong Kong’s Hang Seng off 5.4 per cent.

Woodford told investors the “crisis” in equity markets represents a reappraisal of the global economic outlook: “This readjustment of asset prices is arguably quite rational,” he said.

“My gut instinct is we are in the teeth of an aggressive sell-off, but it may well be substantially through the more acute phase. Asset prices are readjusting.”

Woodford said there may still be more falls, but he said the majority of the downward leg in markets was done.

“There is a bit more to go but I think we have endured a pretty severe sell-off already. I would not expect it to go on for weeks and months. I think it will be over relatively quickly.”

The manager of the £3bn Woodford Equity Income fund said the sell-off “was not a surprise to me”, with his portfolio constructed to cope in a low growth, low inflation environment.

So far his approach is paying off versus peers, the fund off 2.3 per cent in the last three months, versus the peer group average decline of 7.3 per cent, according to FE.

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