Janus Henderson European Selected Opportunities Fund Q1 2020 report

Posted by Guest in Fund and industry updates category on 29 Apr 20


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The update below is authored by Janus Henderson Investors and reproduced, with permission, by Willis Owen. 

Market review

It hardly needs saying that the overwhelming factor for all of us is the global pandemic known as COVID-19. As this virus has spread west, so has its effect on financial markets. Here in Europe, the month of March saw quite astonishing levels of volatility. For example, the EuroStoxx 50 index sold off by 30% to begin the month, before rebounding by 19% from trough to peak.

As ever, headline indices rarely tell the full story and we have seen wild swings at the individual stock level, often intra-day. Not for the first time, extreme volatility has been aggravated by forced liquidation of excess leverage: leveraged corporates, leveraged funds, whether managed by computer or by human, have found themselves in the crosshairs.

The banking system, courtesy of much tougher regulation since the global financial crisis, seems better prepared than usual. That preparation now includes the forced “postponement” or cancellation of dividends. Shareholders in banks are now relegated further down the pecking order, more than a decade after what many saw as the great bailout of “greedy bankers” at the expense of the wider workforce. It is the latter that governments are desperate to be seen to protect this time around.

Governments have decided that it is time to try - the emphasis is on try - to favour one factor of production over another: labour over capital. They know they will be judged on this, as well as on protecting the health of their voters. The era of big government has truly arrived. We would remind investors that we sold out of the banking sector, a large component of most European indices, in early 2019. A prime reason for that decision was that we saw the industry headed inexorably toward regulated social utility status: recent events have probably guaranteed that.

The extraordinary monetary and fiscal stimulus unleashed worldwide should provide the necessary credit and liquidity to get through this recession. True to the old adage that markets stop panicking when policy makers start panicking, the record stimulus injections may have managed to stabilise markets. As usual, the largesse will likely take a few quarters before it works its way through to the real economy and delivers its boost to activity levels, probably in the fourth quarter this year and the first quarter of next year in our view.

For the next few months, equity markets are likely to be working on reducing volatility levels and establishing a broader base, as opposed to narrow leadership. Given the forced deleveraging, investor bearishness and potentially short duration of the recession, we may have already seen the absolute price lows. Sectoral rotation could be quite surprising and painful. Once the stock market sniffs out the virus peak/economic lead indicator trough, the very extended defensives over cyclicals elastic band could snap back quite sharply. It is usually the recession that ends the bear market, not the other way around.

Discrete year performance Janus Henderson European
Selected Opportunities Fund (%)
FTSE World Europe
ex UK Index (%) 
IA Europe
ex UK (%)
1 year to 31/03/2020       -3.83     -7.96   -9.23
1 year to 31/03/2019         0.75      2.57    -1.24 
1 year to 31/03/2018         2.36       4.26      5.80 
1 year to 31/03/2017        24.32     27.88    24.20 
1 year to 31/03/2016        -4.48      -4.16     -1.60 
* Source: Morningstar, at 31 March 2020, 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.

Index - FTSE World Europe Ex UK Index

Index usage - Comparator

The FTSE World Europe (ex UK) Index is a measure of the combined performance of large and medium sized companies from developed and advanced emerging European stock markets excluding the UK. It is the performance target for the Fund and provides a useful comparison against which the Fund's performance can be assessed over time.

Peer group benchmark - IA Europe ex UK

Peer group benchmark usage - Comparator

The Investment Association (IA) groups funds with similar geographic and/or investment remit into sectors. The fund's ranking within the sector (as calculated by a number of data providers) can be a useful performance comparison against other funds with similar aims.

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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.] The Custodian in Spain is BNP PARIBAS SECURITIES SERVICES S.C.A.

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