Fund Profile

Henderson European Focus Trust 07 September 2022


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.

A new version of this profile is available. View Latest

Under the guidance of its fund managers Tom O’Hara and John Bennett, Henderson European Focus Trust (HEFT) follows a long-term, bottom-up approach to large and mid-cap Continental European equity investing with a process characterised by style agnosticism. The managers ignore shorter-term fluctuations in investor opinions and style tailwinds, and instead account for fundamental strength, be its strong balance sheets, or cash and revenue outcomes. The team’s ability to foresee positive ‘changes’ to companies, even in unloved sectors, is a constant feature of HEFT.

The HEFT team’s process has demonstrated long-term value creation, but it is its recent performance which has arguably benefitted most from its balanced stylistic exposures, and HEFT has generated substantial 12-month outperformance relative to the AIC Europe sector average, as well as also beating them over a five-year period. HEFT has also remained competitive relative to its benchmark, the FTSE World Europe ex UK Index, over both a five- and one-year period. Over the long run HEFT has demonstrated strong downside protection relative to its peers.

Thanks to the substantial turmoil in European equity markets over the last six months, Tom and John have been able to initiate a number of new positions at attractive valuations, in both traditional growth and value sectors. The largest change has been the managers’ purchase of a range of oil and gas companies. We outline the rationale behind these purchases, plus the HEFT team’s general investment philosophy, in the Portfolio section.

Over 2022 the trust has taken on structural gearing equal to 8% of NAV at the time of writing, which has been used to finance the oil and gas purchases. HEFT trades on a historically wide discount of 14.7% at the time of writing and the board have recently resumed buying back shares.

Analyst's View

We believe that Tom and John’s approach has been increasingly vindicated in recent months. Their caution around being overly exposed to factor biases has been an advantage for shareholders, as HEFT has not seen the same painful drawdowns that many of its peers have. Meanwhile, HEFT’s managers’ belief that the market was taking a naïve, broad-brush approach to ESG looks sensible in light of the European energy crisis. Formerly ‘cancelled’ sectors like oil production are now considered investable and, thanks to a lack of capex and competition, remain undervalued relative to the essential role they play in meeting today’s energy demand.

HEFT’s discount, which is wide in both historical and relative terms, offers investors a cheap way to access what is a portfolio of relatively attractively valued equities versus the peer group norm (as determined by Morningstar). We believe this may be attractive to investors who want to limit their exposure to valuation risks, as well as to investors who are concerned about the impact of long-term inflation. This is because a more valuation conscious portfolio could be better placed to capitalise on the winners in an inflationary environment, while mitigating the risk of multiple compression in the more expensive growth stocks. We also note that HEFT’s newly implemented gearing has been deployed into a market downturn, which means it stands to do well if markets rally.

We believe the combination of a valuation-conscious portfolio, structural gearing and a wide discount may prove a powerful catalyst to improving HEFT’s shareholder returns, even if inflationary pressures continue in the near term.


  • Has generated attractive downside performance relative to its peers over the long term
  • Discount offers attractive entry point
  • Factor-neutral approach may position HEFT favourably for a persistent inflationary environment


  • The use of gearing can enhance losses on the downside, though the recently issued debt is less than 8% of NAV
  • May not outperform during periods of extreme stylistic momentum
  • Allocation to oil majors and cement manufacturers may be unpalatable to investors with explicit ESG screens
Continue to Portfolio
2024 Kepler Growth Rated Fund

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

Fund History

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…
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…
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
Please enter a valid password
Please enter a valid email address
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
Please enter a company name
Please enter a location name
Please choose an option
Please enter a platform
Please choose an option
Please enter a trust
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
Please select an option
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
Please enter your first name
Please enter your last name
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
Please enter a valid password
Please enter a valid password
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.