For individual investors in the UK

The contrarian in the room

John Bennett, Portfolio Manager of the Henderson European Focus Trust, talks about investing in oil during the ESG movement, how it felt going against the grain, the factors that contributed to the build-up in the energy allocation, and the role these companies could play in the energy transition.

Tom O’Hara

Tom O’Hara

Portfolio Manager


John Bennett

John Bennett

Director of European Equities | Portfolio Manager


9 Jan 2023

Key takeaways:

  • Several factors drove our conviction in the energy sector: oil companies have become more fiscally responsible, valuations in European oil companies are attractive, the supply/demand dynamics look favourable, and inflation will be stickier than expected.
  • One of the good unintended consequences of the ESG movement is that it enforced capital discipline on an industry that has historically – like mining – has been a bit ill-disciplined when it comes to capital investment.
  • We don’t look at where a company comes from, but rather where it is going. The same applies when looking at ESG criteria. The scientists, technologists and cash flows from big oil can be used to help us with the energy transition.

 

 

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.

 

Marketing Communication.

 

Glossary

 

 

 

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 Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • The Company 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 Company.
  • Where the Company 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 Company 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 Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental 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.
  • 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 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 as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incured by the Company can be greater than those of a Company that does not use gearing.
Tom O’Hara

Tom O’Hara

Portfolio Manager


John Bennett

John Bennett

Director of European Equities | Portfolio Manager


9 Jan 2023

Key takeaways:

  • Several factors drove our conviction in the energy sector: oil companies have become more fiscally responsible, valuations in European oil companies are attractive, the supply/demand dynamics look favourable, and inflation will be stickier than expected.
  • One of the good unintended consequences of the ESG movement is that it enforced capital discipline on an industry that has historically – like mining – has been a bit ill-disciplined when it comes to capital investment.
  • We don’t look at where a company comes from, but rather where it is going. The same applies when looking at ESG criteria. The scientists, technologists and cash flows from big oil can be used to help us with the energy transition.