Questioning the Manager: Henderson Diversified Income Trust



John discusses the reaction of bond markets since the ‘Trump bump’ and its challenge to his deflation thesis, his view of where we are in the credit cycle, and the portfolio’s current allocations to the various areas of the fixed income markets.
Cyclical - Companies that sell discretionary consumer items, such as cars, or industries highly sensitive to changes in the economy, such as miners. The prices of equities and bonds issued by cyclical companies tend to be strongly affected by ups and downs in the overall economy, when compared to non-cyclical companies.
Fiscal stimulus – where the government attempts to stimulate the economy, usually by increasing public spending or decreasing taxation.
Monetary stimulus – where a central bank attempts to stimulate the economy, usually by lowering interest rates or through extrodinary measures such as quantitative easing.
Defensive – these companies usually have revenues with low or no correlation to the wider macro-economy
Sovereign bonds – debt issued by governments
High yield – lower rated debt, the higher of which is investment grade.
Credit markets - A marketplace for investment in corporate bonds and associated derivatives.
Credit risk - The risk that a borrower will default on its contractual obligations to investors, by failing to make the required debt payments.
Credit spreads - The difference in the yield of corporate bonds over equivalent government bonds.
Interest rate risk – The sensitivity of a bond to rises or falls in central bank interest rates.
Short – An investment position where the investor will profit from a fall in the value of the security.
Deflation – Reduction in the general level of prices in an economy
Reflation – The rise in prices, usually towards long-term trends
Default rates -- The percentage of companies in a particular market that fail to pay interest or to return an original amount loaned when due.
Credit cycle – The cyclical nature of the demand in corporate debt, usually linked to the economic cycle
Unsecured lending – Where the debtor borrows without having to secure assets against the debt
Gearing/leverage – in the context of investment trusts these are borrowings, usually from a bank, that are used to make extra investments in the market with the aim of making a return greater than the cost of borrowing.

Past performance is not a guide to future performance. 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.

Important information

Please read the following important information regarding funds related to this article.

Henderson Diversified Income Trust plc

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.

Past performance is not a guide to future performance. 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.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Specific risks

  • If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio
  • 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

Risk rating




Important message

Fund name changes

Please note that from the 15 December 2017 funds previously named Janus or Henderson have been renamed Janus Henderson. This change aligns our product names with our name, Janus Henderson Investors, following the merger of Janus Capital and Henderson Global Investors in May 2017.

This name change does not impact on the management of the underlying funds and investors and advisers are not required to take any action.