The recent commodity rally has caused CF Woodford Equity Income Fund to underperform the FTSE All Share index in March as the fund commits itself not to join the “stampede” into oil and mining stocks.
On Wednesday the FTSE rose 1.5 per cent through the course of the day to its highest levels all year, driven by commodity-based stocks.
“We are far from convinced that this rally is sustainable: many industrial commodities remain structurally over-supplied and the prevailing economic headwinds are likely to continue to weigh on demand for the foreseeable future, particularly if the outlook for Chinese economic growth deteriorates further, as we fear it will,” Mitchell Fraser-Jones wrote in a monthly round up for the fund.
Fraser-Jones said the rotational move into commodity-related stocks that began in January came at the expense of more dependable areas of the market.
While this had made for a “challenging backdrop” for the fund’s performance so far its investment strategy would remain broadly unchanged.
Fraser-Jones named Next as one of the firm’s most notable underperformers. Tobacco stocks were named as among the best performers.