Neil Woodford, the U.K. manager whose fund has posted very strong results over the past year and over the long term, thinks Europe is headed for recession, but thinks equities will offer good opportunities despite the economic turmoil.

‘The backdrop is very difficult and there’s huge volatility, but through that volatility the predictable, high-quality, undervalued assets in which we have sub-investments are still delivering and we expect them to keep delivering,” Woodford says, according to CityWire. “In the end underlying corporate performance will drive share prices and the performance of the businesses we have substantial business investments in has been nothing short of excellent, as every bit as good as I had expected.”

“My view is that the outlook for the European economy has deteriorated quite significantly,” Woodford adds, “and I do expect the eurozone to be in recession next year and I think the UK could well be following suit, so I’ve become quite a bit more cautious about economic growth, albeit that hasn’t significantly changed anything I’m doing in the funds.”

Woodford is particularly concerned about the way policymakers are handling the Greek debt crisis. He says there won’t be a solution to the crisis “until the eurozone fundamentally gets to grips with the problems in the banking system.” He thinks that the plan for European banks to raise more capital will lead to a credit contraction across the continent.