John Bennett Director of European Equities | Portfolio Manager
In this episode, Andrew Chiguri and Tom O’Hara, Portfolio Manager of Henderson European Focus Trust, reflect on 2021 and how the Trust navigated the tricky market environment. Tom also touches on the outlook for the coming year and highlights the key factors that might affect stock markets in 2022.
John Bennett and Tom O’Hara, Portfolio Managers of Henderson European Focus Trust shifted the portfolio from focusing on the “industrial V-shape” and “recovery” plays in 2020, to “consumer reopening plays” to take advantage of the economic reopening in 2021.
Growth vs value dynamics have not behaved expected despite inflation looking less transitory. Growth stocks have rallied in 2021 – leading to stretched valuations – whilst value areas of the market have lagged.
Inflation remains an underappreciated risk, with several questions still be answered: will the supply-demand mismatches be resolved, will energy prizes stabilize, and will easing labour market frictions reduce wage pressures.
The outlook for 2022 looks encouraging as vaccines get more evenly distributed and economies open up. In addition, the market remains highly liquid and given the value/growth disconnect – there are pockets of value in certain sectors.
The rate at which the prices of goods and services rise in an economy. Transitory inflation is a temporary increase in prices across the board which is followed by prices returning to pre-inflation levels.
Shares of a company that appear to trade at a lower price relative to the company’s fundamentals, such as dividends, earnings, or sales.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.
If a trust's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
The trust may have a particularly concentrated portfolio (low number of holdings) relative to its investment universe and an adverse event impacting only a small number of holdings can create significant volatility or losses for the trust.
Where the trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.
This trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this trust.
Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
The trust could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the trust.
Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
The return on your investment is directly related to the prevailing market price of the trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the trust. As a result losses (or gains) may be higher or lower than those of the trust’s assets.
The trust may use gearing as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incured by the trust can be greater than those of a trust that does not use gearing.