Edison update on Henderson Opportunities Trust

RNS Number : 6594Z

Henderson Opportunities Trust PLC

16 September 2022

 

 

London, UK, 16 September 2022

Edison issues update on Henderson Opportunities Trust (HOT)

Equity markets have been relatively weak and volatile so far in 2022 as a result of slowing economic growth, rising interest rates, soaring inflation and the ongoing war in Ukraine. Henderson Opportunities Trust (HOT), which has a bias to mid-sized and smaller companies including those listed on the Alternative Investment Market (AIM), has had a tougher time of it in 2022 after a very strong 2021. The investment process is, as with all James Henderson and Laura Foll mandates, mildly contrarian, incrementally taking advantage of valuation anomalies and market volatility to build a good-quality all-cap portfolio trading on attractive valuations. Through 2022 the managers have been gradually reducing areas that have been relatively strong, such as large caps and energy in particular, to fund purchases in more cyclical parts of the market that have been subject to aggressive selling. There is no exact science to being a contrarian fund manager, but the experience of the team over many cycles can give investors confidence that the portfolio can revert to form and outperform over the medium to longer term.

HOT provides investors with a relatively unique option to access the whole gamut of UK equities with a bias to small and mid-sized companies and especially those listed on the AIM market. The UK market has been an unloved asset class over many years, with risk aversion and negative sentiment especially affecting UK smaller companies and those listed on AIM. These factors have created a perfect storm for HOT's recent performance. HOT seeks to invest in a contrarian fashion and in 2022 to date has witnessed a c 20% decline in its NAV (although this was broadly in line with UK small cap peers). It is in the nature of HOT's investment process that there will be periods of underperformance and volatility, but historically investors in HOT have been well rewarded for their patience, with strong long-term capital returns.

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