For individual investors in the UK

Henderson High Income Trust Fund Manager Commentary – June 2022

David Smith, CFA

David Smith, CFA

Portfolio Manager

14 Jul 2022
3 minute read

David Smith, Portfolio Manager of Henderson High Income Trust, provides an update on the Trust highlighting the key drivers of performance over the month of June and outlines recent portfolio activity.

Macro backdrop

The FTSE All Share Index declined by 6.0% during the month as fears over high inflation and slowing economic growth weighed on sentiment.¹ The Bank of England (BoE) raised interest rates by 25 basis points (bps) to 1.25% – the fifth increase in as many meetings. UK monthly gross domestic product (GDP) growth unexpectedly shrank by 0.3% in April, consumer confidence dropped to a record low in June, while the annual inflation rate edged up to 9.1% in May – a 40-year high – from 9.0% in April.² The jobs market remained strong, however, with the number of people in full-time employment and job vacancies both at all-time highs. Sterling weakened against the US dollar – hitting a two-year low around mid-June – weighed down by the largely downbeat economic news, trade tensions with the European Union, and the prospect of another independence referendum in Scotland.

Trust performance and activity

The Trust’s net asset value (with debt at fair value) fell -6.8% during June, underperforming the benchmark’s decline of 5.4%.¹ Given the weak market backdrop, the main detractor from returns was the negative impact from gearing within the Trust.

Within the equity portfolio, the overweight positions in tobacco companies, British American Tobacco (BAT) and Imperial Brands, plus RELX and Tesco were positive for performance as investors sought out their defensive characteristics given recessionary fears. BAT also announced a reassuring trading statement in the period with a clearer path towards profitable growth from its Next Generation Products.

Elsewhere, the overweight positions in Anglo American and National Express detracted from returns. Commodity prices were weak during the month, given the concerns over slowing global economic growth, which weighed on Anglo American’s share price. National Express warned that driver shortages in its US school bus division would hold back margin recovery this year.

During the month, we initiated a new position in the UK listing of Australia’s largest oil and gas company, Woodside Energy. Following the company’s merger with BHP’s oil and gas assets, we think the business is well positioned in low-cost, long-life liquefied natural gas (LNG) assets in Australia and high margin oil production in the US Gulf of Mexico. We also sold the holding in TI Fluid Systems. The company supplies parts to the automobile market, hence the position was sold due to concerns over the potential impact on profits from a slowing global economy and fears over the long-term sustainability of its fuel tanks division given the long-term transition to electric vehicles.


¹Source: Bloomberg as at 30 June 2022.

²Source: UK slowdown fears mount as GDP unexpectedly shrinks in April | Reuters

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 does not predict future returns. 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.


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Important information

Please read the following important information regarding funds related to this article.

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. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • 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.
  • Some of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies.
  • 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.
  • All or part of the trust'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.