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Fund Profile

Henderson European Focus Trust 21 June 2023


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Henderson European Focus 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.

HEFT: pragmatic decision-making has led to good performance in a variety of market conditions…

Henderson European Focus Trust (LON:HEFT) takes a long-term, bottom-up approach to investing with a pragmatic, no-nonsense style that has worked well since manager John Bennett first took the reins in 2011. His co-manager, Tom O’Hara, started in the role in 2020 and together they sit within Janus Henderson’s pan-European equity team, managing a number of mandates in a similar way. As the name implies, HEFT owns a focused portfolio of between 35 – 45 stocks, all of which are truly active investment decisions rather than picked because of their presence in the benchmark.

The team’s approach is to ignore short-term noise and focus instead on fundamental principles, in part related to financial metrics, and in part by more qualitative assessments of change, be that fundamental secular changes or changes to cyclical trends. While not casting themselves as contrarians, the team are often drawn to stocks from unloved sectors.

Flexible thinking has led to strong performance since John first took over managing the trust and this has been shown in both rising and falling markets, including 2022. In addition, HEFT has a dividend yield of 2.7% and the board has a progressive policy of increasing the dividend each year whenever possible. As we discuss in the Dividend and Gearing sections, low-cost gearing may also enhance income in a modest way. HEFT is currently net geared by c. 8% although it has approached 11% at points in the recent past.

HEFT currently trades at a c. 11% discount, in line with its five-year average and with the current peer group average, which we discuss further in the Discount section.

Analyst's View

Pragmatism seems to be an unfashionable concept in these days of polarised opinions on just about anything you care to name, but Tom and John’s pragmatic approach to managing HEFT seems to be working rather well. It is easy to confuse the word ‘focus’ with volatile, but HEFT’s relative performance shows a consistency in all kinds of market conditions that many investors may find appealing. Negative performance in the calendar year 2022 still beat the benchmark and, although no one enjoys negative performance, this resilience is even more notable because it came after several years of strong positive outperformance. HEFT has a meaningful dividend yield and a good track record of progressively increasing dividends, which we discuss in the Dividend section.

HEFT’s structural gearing also adds to its appeal. We think an average interest rate of 1.57% and no refinancing until 2047 is a really attractive deal for shareholders, not just for the normal benefits of gearing, i.e. amplified capital returns, but also the pick-up in yield. HEFT’s portfolio yield is 3.6% , meaning there is a positive spread of almost 200bps between the cost of debt and the portfolio yield. In HEFT’s case, while the primary intention is to gear for the traditional reasons of enhancing capital returns, an additional benefit is that the interest cost is so low that the yield on the portfolio more than pays the interest.

Historically, HEFT has attracted new investors at a premium to net asset value. We discuss in the Discount section why we think this suggests that the current discount of c. 11% represents an opportunity. Alongside very low valuations for some European equities, this could be a very good entry point for long-term investors.


  • Strong performance record combined with good downside protection
  • Very low-cost, long-dated structural gearing
  • A wider-than-average discount on top of low valuations for European equities


  • Geopolitical tensions in Europe mean it may be some time until international investors regain confidence
  • Focused portfolio could from time to time significantly diverge from the index
  • Gearing can amplify losses, as well as gains
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2024 Kepler Growth Rated Fund

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

Fund History

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…
19 Jan 2024 Finding your Eurovision
As one of the top-performing sectors, why does Europe remain strangely out of favour with UK investors?
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’
17 Nov 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…
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…
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 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…
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?
11 May 2020 Kepler Rated: Henderson European Focus
HEFT offers a well concentrated portfolio of high quality European companies…
27 Jan 2020 Fund Analysis
HEFT’s wide discount offers an attractive entry point into an increasingly actively managed portfolio…
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…
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