Gross and Commitment Method Leverage Limits

RNS Number : 9357N

Henderson Diversified Income TstPLC

26 May 2020

 

HENDERSON INVESTMENT FUNDS LIMITED

HENDERSON DIVERSIFIED INCOME TRUST PLC

LEGAL ENTITY IDENTIFIER: 213800RV2228EO1JEN02

26 May 2020

HENDERSON DIVERSIFIED INCOME TRUST PLC

Gross and Commitment Method Leverage Limits

Henderson Diversified Income Trust plc (the 'Company') qualifies as an Alternative Investment Fund in accordance with the Alternative Investment Fund Managers Directive ('AIFMD'). The Company has appointed Henderson Investment Funds Limited ('HIFL') to act as its Alternative Investment Fund Manager ('AIFM'). In accordance with the AIFMD, the Company is required to make available to investors information in relation to its leverage which can be found in the AIFMD Disclosure Document which is available on the Company's website www.hendersondiversifiedincome.com .  

The Board has agreed a proposal from HIFL to increase the Company's gross leverage exposure limit to 400% whilst retaining the commitment leverage limit at 275%. The change enables HIFL to implement in full the Board's requirement that all foreign currency assets should be hedged to sterling, without creating unintended restrictions on HIFL's ability to invest in foreign currency assets and derivatives during periods of high market volatility. The Board does not expect the increase in the limit to give rise to any significant increase in the level of risk taken on by the Company.

Leverage arises from exposure to financial or synthetic gearing and includes any method by which its exposure is increased whether through borrowing of cash or securities, foreign currency holdings, leverage embedded in derivative positions or by any other means. The use of leverage may significantly increase the market and counterparty risk of the Company through non-fully funded exposure to underlying markets or securities.

The gross leverage method aggregates all the Company's exposures other than cash balances held in base currency, even if exposures hedge other assets or liabilities or can be settled net. The commitment leverage method incorporates a different treatment of certain cash and cash equivalent items and of offsetting instruments between eligible assets to reflect netting and hedging arrangements in line with regulatory requirements.

The exposure limit for both the gross and the commitment methods is currently 275%. The Company's investment guidelines require the Manager to hedge foreign currency exposure to protect shareholders. The Board believes that the commitment method is the appropriate, and more relevant metric, given the Company's investment strategy. The Board has therefore resolved that a notification be made to the Financial Conduct Authority to increase the Company's gross leverage exposure limit to 400% whilst retaining the commitment leverage exposure limit at 275%. The increase will take effect on 26 June 2020.

The Company's AIFMD Disclosure Document will be updated accordingly.

For further information please contact :

Hannah Gibson 

Company Secretary to Henderson Diversified Income Trust plc

For and on behalf of Henderson Secretarial Services Limited

Telephone: [phone]

James de Sausmarez 

Director & Head of Investment Trusts

Janus Henderson Investors

Telephone: [phone]

 

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