Henderson European Selected Opportunities Fund Q3 2017 review

Posted by Guest in Fund and industry updates category on 26 Oct 17


Henderson Fund Round Up 

Market review

European equities performed strongly in September following the usual summer slumber. Most noticeably the consensus narrative of a weak dollar and ever lower bond yields was challenged, the latter bouncing smartly from the September lows. Whether this turns out to be yet another short-term reversal or something more durable remains to be seen. Certainly, those of us with exposure to the European banking sector and a wariness of consumer staples could do with it being durable.

Performance review

The fund’s net asset value (NAV) rose by 1.2% in the quarter compared with a rise of 3.6% in the benchmark index.

The financials sector was the largest contributor to outperformance over the quarter with strong performance from DNB, ABN Amro and KBC. We have been taking some profit in the sector although financials remains our largest single sector allocation.

At a stock level GALP Energia was the best performing stock as a rising oil price over the quarter boosted the energy sector. Automotive safety systems manufacturer Autoliv also contributed as the company’s announcement of a strategic review of its operating structure, to create separate companies of its passive safety and electronics divisions, was well received. Our industrials allocation lagged as low cost carrier Ryanair was impacted by an adverse European Court of Justice ruling and scheduling problems and chemical distributor Brenntag’s results disappointed.

 

Discrete year performance Henderson European
Selected Opportunities Fund (%)
FTSE World Europe
(ex UK) Index (%)
1 year to 30/09/2017  19.2 21.9
1 year to 30/09/2016  13.9 19.2
1 year to 30/09/2015   3.0   3.5
1 year to 30/09/2014   9.8   3.9
1 year to 30/09/2013 27.3  27.1
* Source: Morningstar, at 30 September 2017, nav-nav, net income reinvested, net of fees, Class A Acc shares, in Sterling. Past performance is not a guide to future performance. Prices can go up and down and you may not get back the amount originally invested. NAV = net asset value.

Fund activity review

Activity over the quarter included the purchase of Merck, a conglomerate in the areas of pharmaceuticals, life sciences and performance materials. We believe that there is significant optionality in the pharmaceutical pipeline and an attractive valuation for the overall group, despite short-term caution on trends within its performance materials division.

We added ASML, the Amsterdam-based semiconductor manufacturer, as we believe it is well placed to benefit from key industry trends. We also initiated a small position in building materials manufacturer Lafarge Holcim, where we are encouraged by much needed management change. Finally, we introduced Italian utility name Enel which we see as the cheapest among the integrated utilities peer group and is undergoing a promising streamlining exercise under new management.

On the sell side we took profit on our holdings in Caixbank and Danske Bank while adding Swedbank, where we are attracted by the combination of an oligopolistic market structure and high profitability. We disposed of our holdings in AstraZeneca, Total and Sandvik to fund purchases elsewhere.

Fund positioning and manager's outlook

European equities look overbought in the very short term. Nevertheless, noisy geopolitics notwithstanding, we hold to our view that further gains are probable. For our own portfolios to fully capitalise we require no further relapse in bond yields, as well as leadership change from small-mid cap to large cap. This latter rotation seems as elusive as ever. It has to be said that our stock picking must also improve after a lengthy poor run.

Janus Henderson Investors
201 Bishopsgate, London EC2M 3AE
Tel: 020 7818 1818 Fax: 020 7818 1819

Important Information

Please read all scheme documents before investing. Before entering into an investment agreement in respect of an investment referred to in this document, you should consult your own professional and/or investment adviser.
[Past performance is not a guide to future performance.] The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.
If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. [Telephone calls may be recorded and monitored.]
© 2017, Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC.

All data as at date indicated, unless otherwise stated.

Important InformationWillis Owen do not give investment advice so you will need to decide if an investment is suitable for you. If you are unsure whether to invest, you should contact a financial adviser. 

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