UK Investment Trusts

Discover how HFEL generates income from Asia

In this exclusive interview with Shares Magazine (sponsored by AJ Bell), we sit down with Sat Duhra, fund manager of Henderson Far East Income Limited, to explore the trust’s approach to delivering income.

Discrete year performance (%)	Share price (total return)	NAV (total return)
31/03/2024 to 31/03/2025	7.56	1.15
31/03/2023 to 31/03/2024	-4.97	0.88
31/03/2022 to 31/03/2023	-3.90	-7.97
31/03/2021 to 31/03/2022	-2.43	2.60
31/03/2020 to 31/03/2021	25.74	22.72

All performance, cumulative growth and annual growth data is sourced from Morningstar.

Source: at 31/03/25. © 2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance does not predict future returns.

Glossary

Cash flow

The net balance of cash that moves in and out of a company. Positive cash flow shows more money is moving in than out, while negative cash flow means more money is moving out than into the company.

Cash Flow Return on Investment (CFROI)

A cash flow return on investment (CFROI) is a valuation metric that acts as a proxy for a company’s economic return. This return is compared to the cost of capital, or discount rate, to determine value-added potential. CFROI is defined as the average economic return on all of a company’s investment projects in a given year. The return on investment (ROI) is a measure of how well an investment performs.

Dividend

A variable discretionary payment made by a company to its shareholders.

Net asset value (NAV)

The total value of a fund’s (or company’s) assets less its liabilities.

Option

A contract between two parties that gives one of them the right to buy or the right to sell a specific asset, such as shares, bonds or currencies, at a date and price that is fixed when the option is bought. Option trading can be speculative in nature and carries a substantial risk of loss. An option is a form of derivative.

Portfolio

A grouping of financial assets such as equities, bonds, commodities, properties or cash. Also often called a ‘fund’.

Share price total return (investment trusts)

The theoretical total return to the investor assuming that all dividends received were reinvested in the shares of the company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.

Valuation metrics

Metrics used to gauge a company’s performance, financial health and expectations for future earnings, eg. price to earnings (P/E) ratio and return on equity (ROE).

Yield

The level of income on a security over a set period, typically expressed as a percentage rate. For equities, a common measure is the dividend yield, which divides recent dividend payments for each share by the share price. For a bond, this is calculated as the coupon payment divided by the current bond price. For investment trusts: Calculated by dividing the current financial year’s dividends per share (this will include prospective dividends) by the current price per share, then multiplying by 100 to arrive at a percentage figure.

Disclaimer

Henderson Far East Income Limited is a Jersey fund, registered at IFC-1 The, Esplanade, St Helier JE1 4BP, Jersey, and is regulated by the Jersey Financial Services Commission

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), Tabula Investment Management Limited (reg. no. 11286661 at 10 Norwich Street, London, United Kingdom, EC4A 1BD and regulated by the Financial Conduct Authority) and Janus Henderson Investors Europe S.A. (reg no. B22848 at 78, Avenue de la Liberté, L-1930 Luxembourg, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

Janus Henderson is a trademark of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc

What is your background and your role in the investment trust?

My name’s Sat Duhra. I’m the fund manager for Henderson Far East. And I manage the portfolio. I’m based in Singapore, and I look for new ideas. We invest across Asia Pacific, along with a team of analysts in Singapore. My background is predominantly in finance, so I started off doing my Chartered Accountancy after an economics degree, and then I went to work for an investment bank. I’ve also worked on the sales side, and I’ve been at Janus Henderson for almost 15 years.

What are the trust’s investment objectives?

So, the objective is to grow the dividend per share every year and, alongside that, to seek capital growth from Asia Pacific markets. And we invest in a wide range of markets. You have the more developed side of Asia, which is Australia, Singapore, Hong Kong, and then you have some
more kind of emerging exposures. For example, the likes of Indonesia; India’s a very interesting market for us as well. We’ve recently added the Philippines, so we have quite a wide range, diverse exposure across Asia Pacific.

How does the trust generate income?

So, we found that over the years, the number of companies paying dividends and having a formal dividend policy has increased. There’s also been a very strong corporate reform programme across markets such as Korea and China. We recently had a sovereign wealth fund in Indonesia which is pushing the dividends higher for those companies. So many, many things across our region that are driving dividends higher. So, the way we generate income is to invest in many of those companies. Firstly, they have high dividend yield anyway, but we’re seeing very large positive surprises across a number of those markets. And then, alongside that, we own some more growth exposures, for example, in technology. And there we use option overwriting to generate option premium as well. So if you combine that together, those are the things that generate our high income, year on year.

How would you describe the investment process? And can you talk to us through how you generate an idea for the investment trust?

Yeah, so our valuation process is very much to do with value and income. Which means that we focus more on cash flow. So, there’s a number of things we use; we have our own models that look at free cash flow generation. We discount those back to generate valuation. And then we also use CFROI, which is the cash flow return on investment. So all of these things mean that we focus on the cash-generating ability of corporates in Asia. And if they can do that and we can find value in those particular names, then we think they will surprise positively on dividends as well. So that’s a really core part of it: is looking at models, going through the numbers. It’s also meeting companies, it’s going out to the region. So in the last couple of months I’ve been to Thailand, I’ve been to Indonesia, I’ve been to the Philippines. The rest of the team are travelling widely in many other parts. North Asia, Australia, and so on as well. So meeting companies that generates ideas,
doing some screens which filter out companies with high free cash flow yield, and so on. That’s very important. Speaking to team members, we have a wide pool of analysts in Singapore. We also have analysts based in the U.S., in Europe, and so on, and they give us ideas as well, so we work in collaboration with other people within the firm as well. And then obviously we have analysts who we meet regularly. We have corporates coming through to Singapore. We meet them on a regular basis, so I would say there isn’t a particular way of generating an idea. It comes together through all of those different means, and then once we have that, we put it through our evaluation process and then we have the complete idea to go into the portfolio.

What investment themes are exciting in your region and how are you positioned to capture them?

Yeah, that’s a good question because we have spent quite a lot of time over the last 18 months repositioning the portfolio so that we are exposed to some of the best growth themes, not just in Asia, but we think globally. So we’ve maintained the income, but we’ve repositioned away from more cyclical names, repositioned a little bit away from China, and added some great, great exposure in India, for example, or Taiwan or even Korea with corporate reform. So in our view right now, some of the most exciting themes, not just in Asia. But globally, are the technology supply chains in Asia. So for example, if you think about the U.S. companies, they need the semiconductors from Taiwan, they need the manufacturing of servers, they need the chip design, All of that kind of thing happens in our markets and the likes of Korea, Taiwan, and so on. And then we have financial inclusion. We have a great number of banks that are growing very strongly. So across markets such as the Philippines, India, Indonesia, there’s been hundreds of millions of bank accounts opened over the last decade. That creates great opportunities for these banks. And then we have wealth management, which is also. Wealth, part of financial inclusion. So Singapore banks, HSBC, those kinds of more developed market exposures, they are increasing exposure to wealth management as well, and that’s a real driver as well. So financial inclusion, technology supply chains, corporate reform which I touched upon earlier. Regulators, governments in Korea, in China, in Indonesia, are pushing for more dividends from companies as well. So, outside of Japan, one of the best themes globally is infrastructure build-up again, a very strong theme. You think about India, the gas pipelines, the grids, and so on. In China, we have exposure to that and we have exposure to domestic consumption companies going international. So those are the five best themes and most exciting themes that we see in Asia today.

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. Henderson Far East Income Limited is a Jersey fund, registered at Liberté, 19-23 La Motte Street, St Helier, Jersey JE2 4SY and is regulated by the Jersey Financial Services Commission] Ref: 34V

Specific risks

The Company has significant exposure to Emerging Markets, which tend to be less stable than more established markets. These markets can be affected by local political and economic conditions as well as variances in the reliability of trading systems, buying and selling practices, and financial reporting standards.
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.
The portfolio allows the manager to use options for efficient portfolio management. Options can be volatile and may result in a capital loss.
Where the Company invests in assets that are denominated in currencies other than the base currency, the 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 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.
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 (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred 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.