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Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Henderson EuroTrust. 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
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Overview

Henderson EuroTrust (HNE) invests in a portfolio of European-domiciled companies, seeking to generate the maximum possible total return over the medium to long term. Jamie Ross took over from previous manager Tim Stevenson (who had been at the helm for over 25 years) in early 2019.

Since Jamie took charge of the Portfolio he has focussed on integrating a thorough, objective and repeatable investment process and has increased the overall concentration of the portfolio. As a result, HNE has had increased allocations to the communications and technology sectors. As we discuss under Performance, these changes led to HNE being exceptionally resilient during COVID-19, outperforming the market in all phases of the market gyrations. The NAV total return over the 12 months to 30/09/2020 has been 13.3%, compared to 0.4% for the benchmark.

HNE ranks amongst the most ESG-compliant trusts within the entire investment trust universe (as determined by Morningstar). A significant part of the process has always been a dedicated assessment of governance and sustainability, which has resulted in a very ESG-compliant portfolio. The manager’s general thesis is that quality and sustainability tend to go hand in hand and that, all else being equal, those companies which care about ESG are more likely to perform well as financial investments.

While HNE’s objective is total return, it has a solid track record of dividend growth with a compounded growth rate of 12.4% between 2015 and 2019. However, its most recent full-year dividend of 25p for the year to July 2020 represents a cut from last year’s dividend, reflecting a change in dividend policy.

Analyst's View

Henderson EuroTrust continues to deliver outperformance, with Jamie Ross extending his predecessor’s strong record. COVID-19 has clearly provided a baptism of fire, but HNE’s performance during this period shows Jamie is able to keep his head whilst others are losing theirs.

Europe has not been kind to its investors, between Brexit, stalling growth and a pandemic. Jamie has made a number of changes to the trust, improving the objectivity of analysis, with the result that the portfolio has shifted towards the communications and technology sectors. As a result, HNE has beaten the market handily during the COVID crisis, with a calendar-year-to-date NAV total return of 9.9% versus -0.5% for the benchmark (Source: The AIC, as at 30/09/2020). The trust also has strong ESG credentials, ranking amongst the top of the wider trust universe on Morningstar’s metrics – a result of Jamie’s bias towards quality governance and environmental sustainability.

Despite strong relative performance, HNE continues to trade at a relatively wide discount – currently 9.3% – which is wider than its long-term average and its peer group. In the annual report published recently, the chairman takes the view that sentiment against Europe by UK investors and lack of liquidity are the ultimate reasons for the relatively wide discount. We continue to believe that there is potential for a re-rating as Jamie proves his capacity to be a high-quality, active manager, and the current discount is an attractive entry point.

bull bear
Resilience during COVID-19 May miss out on a cyclical recovery if/when COVID-19 is resolved
Wider-than-average discount continues to offer a good entry point Factors influencing the discount may persist into the medium term
Increasingly objective (and thus reliable) investment process May be buying into 'quality growth' at inflated valuations due to COVID-19
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

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)?
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
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…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
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...
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…
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...
23 Sep 2021 Now that's what I call a discount 2021!
For the second year running we examine trusts on discounts which, in our view, don't make sense...
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...
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?
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...
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
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...
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) has a strong track record and the new manager shares all the hallmarks of his predecessor...
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, but some managers see rich pickings for those willing to take the risk...
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 fund managers in the UK with similar characteristics...
30 May 2018 Forza Italia!
Recent weeks have seen Italy's rocky relationship with the EU thrust into the spotlight once again, but apart from fresh volatility - how much has really changed?
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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