March Fund Manager Commentary: Henderson EuroTrust



​Things are getting interesting. Any mention of the word “interesting” in the Investment context reminds me of the Chinese curse: “may you live in interesting times!”

European (ex UK – HNE does not invest in the UK) equity markets seem to be bearing the brunt of investors’ wrath, even though valuations, interest rates and the dividend paying season all should be supportive. Economic news continues to be good – but is also clearly showing that the actual rate of growth is beginning to slow. That environment has sometimes been nicknamed “Goldilocks” in that growth is neither too hot (interest rate rises may be imminent) nor too cold (a recession may be in sight). The ECB has also made it quite clear that it is in no hurry to increase official interest rates, but it has started to reduce the amount of Quantitative Easing (which means they will buy fewer bonds than has been the case in the last few years). Perhaps the European markets are being spooked by the “trade war” rhetoric emanating from the USA, and the fact that the USA has started to increase interest rates over a year ago?

Back in the “real” world most companies have been relatively upbeat in meetings discussing their full year results, and dividends have been increased at least in line with profits growth (in most cases). At the same time companies have been quite open about the fact that the weakness of the US $ against the € is making life a little more difficult – but most of this is simply because of the “translational” impact of currency rather than the more serious problem of producing goods in a more expensive country.

So should we listen to those saying that there is a bear market ahead? Is the best behind us? As always there may be elements of truth in some of this, but there are “bear” and “bull” markets in all sorts of sectors at different times! It is perhaps more interesting to ask “Are some company valuation levels looking interesting for the medium and long term investor?”

We think there are some interesting companies in Europe, and since we now have a £25m borrowing facility in place and are using only a tiny part of that, this may be time to be adding to some positions and we have been doing just that. 

As always when investing, we will require patience. An investor considering Henderson Eurotrust might want to bear in mind that at the end of March 2018 HNE shares were trading at a discount to the underlying NAV of about 7.5%, even though that discount may well widen if sentiment towards European (ex UK) equity markets deteriorates even further.


Translation risk -  the risk that a company's equities, assets, liabilities or income will change in value as a result of exchange rate changes.

Quantitative Easing - a measure whereby a central bank creates large sums of money to purchase government bonds or other securities, in order to stimulate the economy.

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 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.

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Henderson EuroTrust 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 investment products and services are provided by Janus Capital International Limited (reg no. 3594615), 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 registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier). We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Specific risks

  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • 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.
  • The trust may have a particularly concentrated portfolio (low number of holdings) relative to its investment universe and an adverse event impacting only a small number of holdings can create significant volatility or losses for the trust.
  • The trust could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the trust.
  • If a trust's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • 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.
  • 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.
  • 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.
  • 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.

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