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Henderson European Focus Trust plc

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Snapshot in time: Henderson European Focus Trust

While we avoid making investment decisions based on short-term forecasts, 2023 provided its own lessons for Henderson European Focus Trust.

Writing an annual outlook for Henderson European Focus Trust doesn’t necessarily come naturally. We don’t view things on a yearly, or even bi-annual basis. Instead, we seek to identify the multi-year themes that will shape businesses and economies for some time to come, with the goal of achieving long-term capital growth for our investors.

However, there are still lessons that can be drawn from a tumultuous year for markets and economies. Equally, there are factors worth monitoring in the year ahead, even as we maintain our focus on the longer-term horizon.

The themes of the future

When we think of European markets, we think broadly in terms of trends that are impacting businesses and industries on a global basis and that can be channelled through European shares. For us, these fit into clear categories: the boom in capital expenditure, the notion that bigger is currently better when it comes to business and companies that are resilient regardless of the macroeconomic context.

Companies are spending more on themselves – i.e. engaging in capital expenditure – on a wide-ranging basis due to a proliferation of factors. Some of this is externally-driven, including pressure from governments to bring operations closer to ‘home’, while some is driven by a desire to remain competitive, including the big tech companies investing in the infrastructure required for AI implementation and experimentation.

In both these cases, Europe’s ‘makers’ are key beneficiaries, particularly when they have established reputations in particular niches.

Elsewhere, the brewing industry is an exemplar of the notion that bigger can be better. Where smaller breweries flourished pre-pandemic on producing experimental product at relatively low levels of profit, rising costs, in both borrowing and operational terms, are resulting in widespread failures. One of the large scale, highly profitable brewers like ABInbev seem to us to be the most likely candidates to fill this void.

Finally, some industries are resilient regardless of the macroeconomic factors surrounding them. One example is aerospace, experiencing a continued period in the sun after the pressures of the pandemic and which we invest in through Airbus and Safran.

Lessons from 2023

One lesson that 2023 taught us was to stick to our guns. This lesson was drawn from an instance in which we didn’t. We have generally avoided investing in banks but felt that they would do well in a European bull market, so bought into them early in the year. Following the collapse of Silicon Valley Bank, the sector as a whole suffered a fall in valuations.

We realised that the short-term gain that could be made from a bull market was ultimately countered by longer-term challenges of which we were conscious, including building regulatory constraints and the potential for one-off taxes in the aftermath of the interest rate-induced boom in earnings.

Looking into the crystal ball

In an era when borrowing remains expensive and the economic outlook far from certain, we believe that those companies that traffic in tangible goods, including energy, infrastructure and supply chains will be desirable. This is good news for Europe, which is overrepresented in this field, with the continent housing global leaders in renewable energy infrastructure, semiconductor manufacturing equipment and the provision of automated factories, to name a few.

While the desire of Western governments and businesses to build localised resilience into supply chains is known, we are seeing real-time investments being made in a bid to achieve this goal, a reality that we believe is still underappreciated by the market.


Bear market/bull market – A bear market is one in which the prices of securities are falling in a prolonged or significant manner. A generally accepted definition is a fall of 20% or more in an index over at least a two-month period. A bull market is one in which the prices of securities are rising, especially over a long time.

Capital – When referring to a portfolio, the capital reflects the net asset value of a fund. More broadly, it can be used to refer to the financial value of an amount invested in a company or an investment portfolio.

Capital expenditure – Money invested to acquire or upgrade fixed assets such as buildings, machinery, equipment or vehicles in order to maintain or improve operations and foster future growth.

Macroeconomics/Microeconomics – Macroeconomics is the branch of economics that considers large-scale factors related to the economy, such as inflation, unemployment or productivity. Microeconomics is the study of economics at a much smaller scale, in terms of the behaviour of individuals or companies.

Monetary policy – The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. Monetary policy tools include setting interest rates and controlling the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money. See also fiscal policy.


References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

Not for onward distribution. 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. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Henderson Investors International Limited (reg no. 3594615), Janus Henderson Investors UK Limited (reg. no. 906355), Janus Henderson Fund Management UK Limited (reg. no. 2678531), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Janus Henderson Investors Europe S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

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 that is diversified across more countries.
  • Some of the investments in this portfolio are in smaller company shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
  • This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance 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.
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