Trust TV: Henderson Diversified Income Trust – 10 years of income seeking
It’s been an interesting, not to say testing, decade for those in pursuit of reliable investment income.
The aftermath of the global financial crisis presented its own challenges. In the interim, we’ve experienced interest rates at historic lows and bond yields on the floor – indeed negative in some cases – precipitating a clamour for equity income as investors have grown accustomed to a ‘lower for longer’ environment.
More recently, unprecedented central bank stimulus, the prospects for a post-COVID global recovery, and the inevitable release of pent-up demand are combining to herald the return of inflation, placing additional pressure on those in need of real income returns.
Nick Britton of the AIC welcome’s Nicholas Ware, portfolio manager of specialist equity income trust Henderson Diversified Income, into the Trust TV studio.
Nicholas reflects on the opportunities and headwinds he’s experienced in looking to deliver an income-focused return over the past decade, and how the portfolio is positioned to take advantage of the prevailing market conditions over the next 12 months or so.
Please read the following important information regarding funds related to this article.
- If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
- Higher yielding bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
- All or part of the Company's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.