For individual investors in the UK

Time to batten down the hatches?

David Smith, Portfolio Manager of Henderson High Income Trust, talks about the factors currently impacting the UK market, including inflation and interest rates amid a cost-of-living crisis. David also touches on the recent turmoil within bond markets and the need for prudent diversification in volatile market environment.

Catch up on previous episodes of Trust Radio

David Smith, CFA

David Smith, CFA

Portfolio Manager


8 Nov 2022
24 minute listen

Key takeaways:

  • Though the UK stock market has been quite resilient compared to global peers, its performance has largely been driven by the top 20 largest stocks. Meanwhile, the more cyclical smaller-and-medium sized businesses have struggled.
  • We have been lowering our gearing and increasing our bond exposure for a more defensive positioning. The equity portfolio also has a bias towards defensive and more resilient businesses that can navigate a downturn.
  • Valuations in the UK market remain attractive, especially when you look at the P/E ratios relative to other developed markets. While political uncertainty still remains, this valuation gap provides an attractive entry point for investors with long term horizons.

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.
  • 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 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.
  • 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.
David Smith, CFA

David Smith, CFA

Portfolio Manager


8 Nov 2022
24 minute listen

Key takeaways:

  • Though the UK stock market has been quite resilient compared to global peers, its performance has largely been driven by the top 20 largest stocks. Meanwhile, the more cyclical smaller-and-medium sized businesses have struggled.
  • We have been lowering our gearing and increasing our bond exposure for a more defensive positioning. The equity portfolio also has a bias towards defensive and more resilient businesses that can navigate a downturn.
  • Valuations in the UK market remain attractive, especially when you look at the P/E ratios relative to other developed markets. While political uncertainty still remains, this valuation gap provides an attractive entry point for investors with long term horizons.