Top U.K. fund manager Neil Woodford thinks the impact of the financial crisis will be felt for many more years and that the Western world is headed for a period of deleveraging. But he’s finding attractive opportunities in pharmaceutical and high-dividend stocks.

“Mr. Woodford believes [too many fund managers] are failing to understand the bigger picture of the ongoing banking crisis,” writes Mark Dampier, the head of research at Hargreaves Lansdown, in a piece for MoneyMarketing.co.uk. “He maintains the environment has permanently changed and while policymakers are responding, they have a limited range of tools,” says Dampier, who recently met with Woodford to talk about the market and economy. “He sees no magic wand to make the West’s debt problems go away and does not expect a new stock market bull run — at least not one built on solid foundations. The European Central Bank’s long-term refinancing operation is, in his view ‘the starting gun for deleveraging.'”

Woodford thinks banks are still in trouble and says some may face nationalization. They will have to write off their bad debts at some point, making credit contraction inevitable. With that in mind, he owns no bank stocks, Dampier writes, adding that Woodford “wants to own companies that are well managed, have strong balance sheets, resilient business models and generate plenty of cash. His focus is on dividends and dividend growth and he believes companies with these characteristics can be found at attractive prices.” Woodford is also high on pharma stocks, with his exposure to the sector at 30%.