John Bennett, Portfolio Manager of Henderson European Focus Trust, provides an update on the Trust highlighting factors affecting the European market and any changes made to the portfolio.

While absolute returns were strong, December proved an underwhelming month for our strategy in terms of returns relative to the market. The month thereby capped a particularly uninspiring quarter for performance. Our longstanding bias toward "reopening plays" has suffered in recent months. Any strategy which favours a return to normality must, of course, be cognisant of the risk of overwhelming Covid-19 variants. Yet, our view is that the latest Omicron variant has prompted a response from European politicians which might be described as outsized, draconian, and deeply harmful.

At the time of writing, the earlier evidence from South Africa and now from the UK, suggests to us that panicking politicians, some drunk – not on the Hogmanay Hooch but on power - will prove to have been terribly wrong in implementing their latest restrictions. Our response, not for the first time in this two-year-old pandemic, has been to sit tight. Thus, minimal portfolio changes remain the order of the day.

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