Neil Woodford, manager of Invesco Perpetual's £20bn Income fund range, has become more cautious on UK equities after a strong six-month showing from the FTSE 100.
Woodford, running the ever-popular Invesco Income and High Income funds, argues the UK's economic environment remains extremely challenging.
As such, he said investors need to remain focused on the very real risks caused by low growth, adding many have overlooked the disappointing corporate news flow recently.
"At a time when the UK stock market appears more relaxed about the risks facing the world economy and financial markets, we have become a bit more cautious," said Woodford.
"The environment is still very challenging in a real sense, but financial markets have been propped up by symptomatic treatment - i.e. monetary stimulus including quantitative easing - rather than by a cure of the world's economic problems."
Investors' enthusiasm for equities has played a hand in the FTSE 100's 8.51% rise over the past six months, as investors move into risk assets in an attempt to generate a return above cash.
Woodford said in this environment disappointing corporate news has not been reflected in the market, particularly in January, prompting the manager to revert to a more cautious stance.
"Company news over January typically confirmed tough trading conditions, especially in southern Europe. Imperial Tobacco stated with its results that the macro environment continued to be challenging, with trends worsening in a number of markets. Astra Zeneca was another to warn of difficult market conditions," he said.
Across his income suite of portfolios Woodford remains heavily skewed to the pharmaceutical and tobacco sectors, backing the likes of GlaxoSmithKline, AstraZeneca, British American Tobacco and Imperial Tobacco.
His big change recently was to sell his position in Voadafone, a former favourite in his two behemoth income funds.
Woodford has been gradually selling down his position in the telecoms giant over the past twelve months, and recently exited the stock.
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