Janus Henderson European Selected Opportunities Fund Q1 2018 report

Posted by Guest in Fund and industry updates category on 27 Apr 18

Market review

Markets do, eventually, remind us that momentum works both ways and the early weeks of 2018 have served up just such a reminder. As 2017 developed, our sense of unease extended beyond what may be considered examples of exotica, such as “unicorns” and cryptocurrencies: we continue to believe that the US equity market itself has been hijacked by momentum players, whether human, robotic, algorithmic, or the artificially intelligent. While European stock markets are home to much less in the way of glamorous technology companies, we must always be aware that US markets set the tone. It remains our belief that the latter are overvalued.

Performance review

The fund fell by -4.2% in the quarter compared with a fall of -4.7% in the benchmark index.

Key contributors over the quarter came from the paper and packaging sector. As we highlighted in recent reports there are encouraging signs that volatility and stock dispersion are making a long overdue return, providing opportunities for active managers. Having taken advantage of the recent move in Smurfit Kappa to increase our position, the fund gained from its holding as the company rejected an unsolicited bid from US peer International Paper. We added to our position. From the same sector, Finnish pulp and paper manufacturer UPM-Kymmene benefited from strong product price momentum in the first quarter of 2018.

The fund also benefited from holding Autoliv, a key holding in the auto components sector, as the company’s fourth quarter 2017 results and strong guidance for 2018 lead to broker upgrades. We took advantage of a rising share price to new highs to take some profit. Other strong performers in the fund over the quarter included Norwegian fish farming leader Marine Harvest which is benefiting from continuing strong global demand for salmon. By way of contrast performance was adversely affected by our holding in Anglo Dutch publisher RELX, a consistent contributor to performance over the long term.

Discrete year performance Henderson European
Selected Opportunities Fund (%)
FTSE World Europe
(ex UK) Index (%)
1 year to 31/03/2018    2.4   4.3
1 year to 31/03/2017   24.3 27.9
1 year to 31/03/2016   -4.5  -4.2
1 year to 31/03/2015   10.9    7.5
1 year to 31/03/2014   18.9  17.3
* Source: Morningstar, at 31 March 2018, nav-nav, net income reinvested, net of fees, Class I 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 a new position in Safran from the aerospace sector. We believe that the company, which completed the acquisition of French competitor Zodiac in March 2018 at a price lower than its initial offer, will generate robust future cash flows. German sports retailer Adidas proved to be an excellent performer for our funds in 2015/2016 and following a stock derating we reintroduced the shares based on the company’s strong margin potential. In the insurance sector we introduced Zurich Insurance where we are attracted by a positive delta to rising interest rates and a secure dividend.

We reshaped our capital goods allocation by disposing of Siemens and adding Schneider Electric, which in our view is trading on an attractive valuation and is demonstrating an improving growth rate. Elsewhere we sold Italian utility Enel and exited Axa, which lagged after announcing the acquisition of XL Group.

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. (We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes).

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), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. © 2018, 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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