August Fund Manager Commentary: Henderson EuroTrust

23/08/2018

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​July was a difficult month for European equities, and August has continued that trend. No matter what the news has been, there has been a way to interpret it negatively in Europe, to the extent that the divergence of performance between the US Equity market and Europe has become extreme. An argument could be made that Europe is more in touch with the reality of the prospect for slightly slower growth than the USA, which may mean that any sell off might be led by the USA. However, any sell off in the US market would prevent European markets from making gains in absolute terms.


Henderson Eurotrust had a poor July and lagged the index, but still managed to outperform over the fund’s Financial Year to end July 2018. Given the delay with which I am writing this report (for which apologies), I can update that  most of that under-performance has been recovered by mid-August, as a number of our large positions (notably Deutsche Post, Amundi and Novo) have all rallied strongly recently. It is a fact of modern markets that some moves seem both exaggerated and short lived, begging the question as to who is acting in such a short term manner.


With Q2 results largely completed, the earnings picture for European companies looks largely intact for 2018, although evidence is mounting that there will be slower growth ahead. There may also be repercussions from the crisis in confidence in Turkey and fears of that spreading to other EM, and the tragic collapse of the viaduct in Italy will almost certainly fuel political backlash against legacy modes of conduct in industry.


We continue to hold a small (2.6%) cash position.

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

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 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

  • 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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