Henderson European Focus Trust (HEFT)
29/05/2024
Results analysis from Kepler Trust
Intelligence
Over the six months to
31/03/2024, Henderson European Focus Trust (HEFT) produced an NAV
total return of 17.9% and a share price total return of 17.0%,
outperforming the benchmark. Longer-term, over five years to
31/03/2024, the trust's NAV and share price returns of c. 85% and
c. 82% compared to the benchmark's c. 57% return and the
Morningstar Europe peer group's NAV total return of c.
63%.
The largest positive
contributions to performance were Nestle (not owned), aircraft
engine maker Safran, BE Semiconductor, Roche (not owned), long-term
holding Holcim, a construction materials manufacturer, and Airbus,
a customer of Safran. Negative contributions came from pulp and
paper manufacturer UPM Kymmene, oil company Aker BP, healthcare
company Grifols (sold) and food retailer Ahold Delhaize (sold). The
managers note that many of the detractors exhibit more cyclical
characteristics, in contrast to the 'global winners' that
contributed most to performance.
During the period HEFT
announced a proposed combination with Henderson Eurotrust (HNE),
also managed by Janus Henderson, with HEFT's manager Tom O'Hara to
be joined by HNE's manager Jamie Ross as co-manager. Under the
proposals HEFT will be the continuing trust, renamed as Henderson
European Trust, and the transaction is, subject to shareholder
approval, expected to be completed in July 2024. The trust will
estimated net assets of c. £680m, making it one of the largest in
its peer group. It is notable that the two trusts in the peer group
with assets over £700m both trade at much narrower single-digit
discounts than the rest of the peer group. One can't of course
expect any re-rating to come automatically, but the 'size matters'
argument of professional investors only gets louder every year, and
this transaction removes a barrier that could in our view prove
decisive for HEFT's discount, especially if this is combined with
continued positive progress for European
equities.
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