Henderson EuroTrust

Having had the longest-tenured manager in the sector, a new manager is taking the reins and making some subtle changes to the portfolio.

Add to watchlist Request a meeting Download View key data

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.

Henderson EuroTrust

Henderson EuroTrust aims to deliver superior total returns from a portfolio of high quality European (ex UK) investments. Tim Stevenson has been running the portfolio for the past 24 years, however in the past few months he has announced his retirement and it has been announced that James Ross will be taking over as lead manager. James joined Janus Henderson in 2007 as a graduate, initially working as a trainee fund manager in European equities, before becoming a co-manager on the Henderson UK Alpha Fund (OEIC) in 2013. After spending three years on the UK team, James was delighted to be offered the chance to move back to the European equity markets team. James was appointed deputy fund manager on EuroTrust in March 2017 and then co-manager at the start of October 2018; and he works with Tim on the Henderson Horizon Pan European Equity Fund.

Despite a change in manager the investment process and style in which the £244m trust is run will remain largely the same. The portfolio will continue to be comprised of good quality, reliable companies which offer consistent returns for the shareholders. This is achieved through selecting companies with strong market positions, strong balance sheets, consistent growth and high-quality management. Although many of the companies share common characteristics, the managers split the holdings into three broad classifications; compounders, improvers and special opportunities.

Because of the outlook of the managers, and the types of company that they are looking for, Tim and James have biases within particular sectors. The company’s largest overweight is towards the healthcare sector (9%). Within this, Tim is particularly bullish towards the healthcare services, whereas James prefers the pharmaceutical subsector. Both managers also see opportunities within the IT and industrials sectors.

Previously the portfolio has been comprised of around 50 stocks (between 40 and 60), with no benchmark 'fillers'. However, James is looking to further concentrate this figure and, since joining Tim, has reduced the portfolio down to 43 positions (at the time of writing). Once he has full control of the portfolio, he anticipates the portfolio will be comprised of between 40 and 45 holdings.

The trust has an extremely admirable long-term track record, and since inception has delivered an annualised NAV return of close to 11.5%, almost 5% greater than the benchmark MSCI Europe (ex UK), c.5% greater than the IA Europe sector, and c.4% greater than the AIC Europe peer group. This having been said, the trust has been unable to deliver positive returns since the start of 2018 (-4.7% to 14th November), however much of this can be attributed to the correction we have seen in October. Nevertheless, the trust has still managed to outperform the benchmark (-5.9%) and the open-ended peer group (-6.8%), but has lagged the AIC peer group (-1.8%).

Although the trust has more of a focus on growth and total returns rather than the dividend per se, the board and manager do aim to provide a growing level of dividends to shareholders. The portfolio currently yields 2%, in line with the weighted average of the AIC sector.

The trust’s discount has been known to fluctuate, and as of the start of November the trust is trading on a discount close to 8%. This is slightly wider than the one-year average of -6.2%.

William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.

Kepler View

The trust has an exceptional track record in terms of performance, and it appears that Tim has passed his ex-UK ‘quality growth’ style of stock picking onto James Ross. Therefore, we see no reason why James couldn’t continue in the same fashion, albeit with a few changes to the portfolio. We particularly like the fact that James recognises that his role is to have conviction, which if he is successful will add alpha. We will be interested to see how this punchier, more concentrated portfolio progresses.

In comparison to peers, the trust has managed to outperform over most time periods and has done well to limit the losses during the correction in October. The past year has been a tough time for European equities, with the political situation making many investors shy away from the region. This has meant that we have seen the discount widen to almost double-digit figures; however as we have seen multiple times previously, we may see the discount narrow significantly should sentiment towards Europe improve.

Bull
Bear
Exceptional track record of outperformance relative to peers and the benchmark
James is a less experienced new manager, and may not be able to ‘fill Tim’s boots’
The Janus Henderson set up should mean a relatively easy transition to a new manager
Uncertainty continues to cloud investor sentiment towards Europe
Discount is at a historically wide level

Fund History

Related Research

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.



Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. 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
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
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
{{item.msg}}
Please select an option
{{item.msg}}
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
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
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. We do not share your personal information and your answers are not linked to your identity for marketing purposes.
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.