Ben Lofthouse, Portfolio Manager of Henderson International Income Trust, discusses how he is navigating the current market environment, how companies within the portfolio are dealing with rising input costs to sustain margins, and explores the pros and cons of nearshoring.
Despite what has proved to be a challenging market environment, the Henderson International Income Trust has held up relatively well, benefiting from its globally diversified positioning.
In order to sustain margins and remain competitive, companies have been raising prices to deal with higher labour, energy, shipping, and raw material costs.
The Covid-19 pandemic highlighted the fragility of global supply chains and to build resilience within their processes, businesses have been bringing certain aspects of their manufacturing closer to home – a process known as nearshoring.
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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.
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.
Higher yieldings bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets.
The portfolio allows the manager to use options for revenue enhancement purposes. Options can be volatile and may result in a capital loss.
Global portfolios may include some exposure to Emerging Markets, which tend to be less stable than more established markets and can be affected by local political and economic conditions, reliability of trading systems, buying and selling practices and financial reporting standards.
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.
If the trust seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
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.
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