Fund Manager commentary - Henderson EuroTrust

10/01/2019

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​December was a slightly soft month for performance. The last few months have been dominated by deteriorating economic data led by a slowdown in China, macro-political concerns in Europe and ever more unpredictable moves being made by Donald Trump. The fund’s underperformance during the month was attributable to two main factors. 

First, Inditex suffered from a profit warning during the month.  The damage suffered by the Trust was limited by the fact that we had significantly reduced the position during the second half of 2018. Inditex remains a very good company, but one that operates in an increasingly difficult end market environment; we have retained a small position for the moment. Second, we have zero exposure to Utilities, which was the best performing sector in December. We can understand why the sector might seem attractive in the short term due to its lack of economic sensitivity and ‘under-ownership’ by institutional investors, but we remain completely unconvinced as to the long term merits of being exposed to any stock within the sector. Better performances came from our positions in Epiroc, Munich Re and Getlink.

We did not trade very much during December. However, we have continued to reduce position sizes in both Amundi and in Deutsche Post. With the former, we are concerned about the medium term outlook for flows given weak market conditions and with the latter, we are troubled by the ongoing regulatory discussions in the German parcels business and by the potential for the Express business to see some level of slowdown on account of softer global trade volumes. 

As ever, we continue to spend the majority of our time looking for companies that can generate sustainably high returns, whilst also trying to identify specific opportunities where companies are generating average or low returns where we see the scope for a significant improvement in the return profile. 


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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