Results analysis from Kepler Trust Intelligence

Henderson European Focus Trust PLC

29 May 2024

 

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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