Fund Profile

Henderson European Trust 23 October 2024

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Henderson European Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
HET picks up where its predecessors left off…
Overview

Henderson European Trust (HET) is the product of the July 2024 merger of Henderson European Focus Trust (HEFT) and Henderson EuroTrust (HNE), and is co-managed by Tom O'Hara and Jamie Ross, the respective managers of the two trusts . In the Portfolio section we discuss how HET looks compared to its predecessors, but essentially it continues with the concentrated forty or so stock portfolio approach of both, homing in on companies the team see as global leaders. While there is currently a quality growth tilt to the portfolio, the team take a pragmatic approach to investing, and aren't bound by a particular investment style.

Tom and Jamie both have a track record of outperforming HET's benchmark and have worked together for several years within the 11-strong European equities team at Janus Henderson. The two predecessor trusts had a c. 50% overlap in portfolio immediately before the merger and since then they have made various changes, for example reassessing and reducing exposure to the luxury goods sector and more recently taking positions in some interest rate sensitive stocks in the utilities, telecommunications and REIT sectors.

HET trades at a c. 12% discount, in line with its five-year average, and a little wider than the peer group average of c. 9%. In July HET was promoted to the FTSE 250 Index, which could create additional demand for the shares in due course.

HET is primarily aimed at producing capital growth but nonetheless has an attractive 2.4% Dividend yield. The merger created changes to the timing of dividends in 2024, but the expectation is to return to a similar pattern established by predecessor HEFT. HET is currently geared just under 4%, with most of its long-term, low-cost Gearing deployed. Any additional gearing will be funded by short-term borrowings.

Kepler View

We've discussed the rationale for the merger to create HET in a previous note , but in summary, a larger trust has cost efficiencies, a broader investor audience and is more liquid. In HET's case, the merger was executed at no cost to shareholders of either trust and it also brings together two managers whose approaches had already converged, so while there are a few corporate refinements to HET, which we look at in the Charges and Discount sections, changes to the portfolio following the merger are mostly related to investment decisions by the team rather than for technical reasons.

Merger aside, the business of fund management never stops and the pair have been busy reassessing their position in the luxury goods sector, now reduced, and looking for ways to 'lean in' to the interest rate cutting cycle, taking a new position in the real estate sector. This is an interesting time for European equities, with large stocks in particular performing well over the last year despite very muted investor sentiment, which we look at in the Performance section.

In a recent article we discussed some reasons why macro-factors for Europe don't necessarily map across to European equities, and HET is a very good example of this, with a portfolio of companies expected to grow due to global trends in healthcare, IT spending, energy security and deglobalisation and thus not especially tied to their country of listing.

For readability, we will simply refer to HET when we are referring to historical factors relating to Henderson European Focus Trust (HEFT), unless otherwise specified.

Bull

  • A merger of two successful strategies into one, with greater liquidity and economies of scale
  • Remains at an attractive discount, with new ‘backstop’ measures in place
  • European equities trade at a historically large discount to the US

Bear

  • Investor sentiment to Europe remains weak, likely due to macro concerns
  • Gearing can amplify losses as well as gains
  • European equity funds continue to see outflows, albeit a reversal could be very positive for markets
Continue to Portfolio
2025 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

12 Feb 2025 Lies, damned lies, and statistics
The impact of the pandemic in 2020, and interest rates in 2022, will have a profound effect on performance data in March this year...
08 Jan 2025 Kings of the castle
We reveal the winners of our 2025 investment trust ratings…
12 Dec 2024 Results analysis: Henderson European Trust
HET delivers outperformance from its portfolio of global leaders…
27 Nov 2024 What would Kenny Rogers do?
As the world waits for the Trump show to start in earnest, should you hold ‘em, fold ‘em, walk away or run?
23 Oct 2024 Fund Analysis
HET picks up where its predecessors left off…
21 Oct 2024 Monthly roundup: news on CHRY and ATST, highlights of our latest webinar series and the most popular investments in September
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
14 Oct 2024 Henderson European: a leading investor in global leaders
Europe isn’t just about lovely holidays, although we could do with one of those too…
13 Oct 2024 Global equities in a year of change
Watch and download the presentations from this week's event...
02 Oct 2024 Hot property
Are the stars aligning for a revival in the fortunes of the REIT sector?
09 Oct 2024 Henderson European
Jamie Ross and Tom O'Hara
Rewatch this webinar as part of our October online series 'Global equities in a year of change' hosted by the team at Kepler Trust Intelligence...
Watch Recording
24 Jul 2024 Go big or go home
Two of our analysts debate whether trusts consolidating and getting larger is good or bad for investors…
22 Jul 2024 Flash update: Henderson European
Henderson European (HET) completes its merger, making it one of the largest trusts in its peer group…
10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
29 May 2024 Results analysis: Henderson European Focus Trust
HEFT outperforms ahead of its forthcoming merger...
15 May 2024 Why'd you have to go and make things so complicated?
European growth may be more complicated, and positive, than we suspected...
24 Apr 2024 Is ESG finished?
Two of our analysts debate whether it’s time to give up on ESG…
26 Mar 2024 Flash update: Henderson European Focus (HEFT) and Henderson EuroTrust (HNE) proposed merger
What are the benefits of the Proposed merger of Henderson European Focus Trust (HEFT) and Henderson EuroTrust (HNE)?
13 Mar 2024 Roller coaster ride
Thematic funds have seen significant outflows over the past two years…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
13 Dec 2023 Results analysis: Henderson European Focus Trust
A focused portfolio of European ‘Global Champions’
05 Dec 2023 Don’t Panic!
Our analysts look for value against a backdrop of bombed out investment trust discounts…
08 Nov 2023 Once more into the breach?
With yawning discounts across the board, some sectors have been hit harder than others - our analysts think there could be value there for those with the sangfroid to fight for it...
13 Nov 2023 Martin Currie Global Portfolio and Henderson European Focus Trust
Zehrid Osmani and Tom O'Hara
Rewatch this webinar which is part of our November online event 'Discounted opportunities in a tough market'...
Watch Recording
21 Jun 2023 Fund Analysis
HEFT: pragmatic decision-making has led to good performance in a variety of market conditions…
14 Jun 2023 Let's go round again?
Discounts have ballooned across the investment trust world, but our analysis shows we've been here before...
25 May 2023 Results analysis: Henderson European Focus Trust
HEFT: outperformance comes from a pragmatic and flexible approach...
19 Apr 2023 Are we nearly there yet?
We look at which trusts have done best year to date, and ask where there may be value…
16 Mar 2023 Diversity matters
We examine the effect of blending multiple funds within your regional allocation and find that – while the culture wars may rumble on elsewhere – the benefits of diversity for investors are unarguable…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
08 Dec 2022 Results analysis: Henderson European Focus Trust
HEFT’s valuation sensitivity and strategic flexibility look well suited for a troubled economic period…
05 Oct 2022 European equities: Oui ou non?
Our analysts go head to head on the prospects for investors looking to the continent for prospective investments...
07 Sep 2022 Fund Analysis
HEFT has generated good recent performance, and trades at an attractive discount…
27 Jul 2022 Has the comeback begun?
Our analysts debate whether the market has fully priced in the current inflation and looming recession…
08 Jul 2022 Fund Analysis
HNE’s fund manager has doubled down on high-quality companies in the recent market rout, with the trust trading on a wide discount…
25 May 2022 Results analysis: Henderson European Focus Trust
HEFT has shown strong resilience despite the headwinds facing Europe, thanks to a committed valuation discipline…
25 Mar 2022 Slides and Audio: Henderson European Focus Trust
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 15 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
02 Feb 2022 Fund Analysis
HEFT’s stylistic balance has allowed it to outperform over myriad market environments, yet it trades at an attractive discount…
08 Dec 2021 Results analysis: Henderson European Focus Trust
HEFT has delivered solid NAV returns this year, and shareholder returns have been buoyed by a closing discount…
01 Dec 2021 Fund Analysis
HNE’s discount has widened recently despite its impressive risk/return profile…
06 Oct 2021 Slides and Audio: Henderson EuroTrust
Download the presentation and listen to the audio from our 'Now that's what I call a discount!' Autumn conference on 30 September...
09 Sep 2021 What next for European equities?
After a strong period for European equity markets, we ask whether this trend can continue…
10 Jun 2021 Green is good!
2021 will see billions dedicated to sustainable initiatives, which brings with it a host of possible investment opportunities...
10 Jun 2021 Fund Analysis
HEFT offers investors flexible exposure to Europe, with a current tilt toward value supporting the potential for returns…
27 May 2021 Results analysis: Henderson European Focus Trust
HEFT is positioned for the next leg of Europe’s pandemic recovery, having outperformed its benchmark over the last six months…
28 Apr 2021 The next value opportunity?
Two of our analysts debate whether Europe's improving vaccination programme will be the next opportunity for investors in their pursuit of returns...
05 Mar 2021 Fund Analysis
Active re-positioning around the COVID-19 recovery means HNE continues to widen its outperformance….
16 Dec 2020 My haven’t you grown!
How sustainability has gone from zero to hero in 2020…
28 Oct 2020 Fund Analysis
HNE has outperformed in each of the three phases in markets this year, yet trades on a discount of 9.3%...
15 Oct 2020 Nice guys finish first
ESG has moved from hippy pipe-dream to corporate mainstream, but what is it really and where do we see opportunities?
19 Aug 2020 Has the time come for Europe?
With mutual eurozone debt established all eyes are on the continent once more; but what will drive relative returns?
29 Jul 2020 To be, or not to be (geared), that is the question
Gearing is part of the toolkit that trusts use to outperform OEICs. But how is it best implemented?...
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
05 Feb 2020 The best form of defence
We look at the continued rise of passive funds, and find out how investment trust managers are countering it...
27 Jan 2020 Fund Analysis
HEFT’s wide discount offers an attractive entry point into an increasingly actively managed portfolio…
18 Dec 2019 The squeeze continues: how trust costs keep falling
As pressure on costs remains, we reveal which trusts have achieved the most significant reductions in 2019….
12 Dec 2019 Fund Analysis
The new manager is now outperforming, meaning HNE’s current discount is an interesting proposition…
26 Jun 2019 Measure for measure
In the first of a two-part series, we examine the tools investors can use to assess how active a manager actually is…
24 Apr 2019 Nothing compares to EU
Currently one of the financial world's most unloved regions, we look at the sectors that are unique to Europe and how the persistent pessimism has presented attractive opportunities…
24 Apr 2019 Fund Analysis
Henderson EuroTrust (HNE) offers a great opportunity for investors to diversify their portfolios and gain exposure to some of the unique companies that Europe has to offer...
03 Apr 2019 Nice guys finish first
We review the rise of ESG, its impact on investment trusts, and the various ways ESG has evolved in the trust world...
28 Nov 2018 Every cloud...
The endless grinding negativity of Brexit has driven investors away from Europe in scores, leaving rich pickings for opportunistic buyers...
26 Nov 2018 Fund Analysis
Having had the longest-tenured manager in the sector, a new manager is taking the reins and making some subtle changes to the portfolio.
07 Nov 2018 The Great British Buffett
New research claims to have identified the secret of Warren Buffett's success; we apply similar principles to find the UK's answer to The Sage of Omaha...
16 Oct 2018 The Investment Trust Advantage
Our recent conference for discretionary fund managers saw some of the UK's leading fund managers discussing the outlook for the world's major regions and asset classes...
30 May 2018 Forza Italia!
Recent weeks have seen Italy's rocky relationship with the EU thrust into the spotlight once again, but we think volatility for European equities may be a buying opportunity...
30 May 2018 Fund Analysis
This fund has the longest-tenured manager in the sector, with an impressive consistency of outperformance of the benchmark...
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