Results analysis from Kepler Trust Intelligence

Henderson European Focus Trust (HEFT)

27/05/2021

Results analysis from Kepler Trust Intelligence

HEFT is positioned for the next leg of Europe's pandemic recovery, having outperformed its benchmark over the last six months.

The managers continue to actively position the trust around the varying phases of the pandemic recovery. The most recent change has been a substantial increase in its exposure to consumer discretionary stocks, in preparation for an expected recovery in consumer spending resulting from Europe's vaccine rollout and increased consumer savings.

Kepler View

Henderson European Focus Trust (HEFT) offers investors a 'core' approach to active European equity investing. Its managers, John Bennett and Tom O'Hara, follow a concentrated yet pragmatic approach to investing, intentionally avoiding the restrictions of a single investment style, be it value or growth.

The fund managers believe that by adopting this flexibility they can avoid being caught on the wrong side of the market i.e. being committed to a single style of investing during periods where the market deems it to be out of favour.

While all of these components are key to HEFT's long-term success, helping the trust to outperform its benchmark by 6.7% over the last five years, the fund managers' flexible approach to rapidly changing corporate conditions has been particularly effective amid recent market turmoil brought about by the pandemic. Over the last six months, they have benefited from identifying the nature of the post-pandemic V-shaped recovery in Europe. Whereas previously the portfolio was positioned to capitalise on a rapid recovery in industrial stocks post-crash, the managers now foresee a rapid rise in consumer spending.

We believe HEFT is positioned particularly well for the near term, thanks to the managers’ adaptability and this near-term potential makes the current discount of 8.9% interesting, especially if the trust can continue its recent outperformance.

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