John Bennett, Portfolio Manager of Henderson European Focus Trust, provides an update on the Trust highlighting factors affecting the European market and areas where he is finding opportunities.

At the time of writing, the world economy is facing the stiff challenge presented by what could be termed a ‘shortage of everything’. In the energy sector, a supply shortage has been exacerbated by the ‘gold rush’ known as Environmental, Social and Governance (ESG) investing. Politicians, protesters, and investors are seemingly uniting to ‘cancel’ certain corporates and/or industries. This, in turn, has led to something of a starvation of capital committed to the likes of oil exploration and carbon energy infrastructure. We are now faced with the harsh realities of such cancellation as the world is brought to a shuddering reality: that the energy transition will take time and it cannot be rushed. As unfashionable as that view may seem, it is also unfashionable, to some, to hold oil stocks in investment portfolios. Here we see opportunity: to invest in seriously undervalued stocks and, via engagement, to demonstrate that those companies are part of the solution.

Our portfolio activity in the month of October broadly continued the prior month’s direction of travel, whereby we topped up some holdings in selected names in the “value” sectors of autos, banks, and energy.