Janus Henderson Global Equity Fund Q1 2019 report

Posted by Guest in Fund and industry updates category on 24 Apr 19

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

Fund Performance review

The fund returned 9.7% in the first quarter, underperforming the MSCI All Countries World Index which returned 9.8%.

From a sector perspective, there were strong positive contributions from holdings in the communications services and information technology sectors. The fund’s structural lack of exposure to lower quality cyclicals, such as energy and materials, detracted from relative performance.

Netflix was the fund’s strongest positive contributor to returns after its fourth quarter results revealed strong subscriber growth, particularly outside of the US. Adoption of over-the-top (OTT) media continues to progress, disrupting traditional scheduled television and expensive cable television providers. This has attracted the likes of Amazon and Disney to compete with Netflix for subscriber dollars. Netflix’s historical and continued commitment to developing original content with a budget way in excess of many other providers does, however, create a competitive advantage and barriers to entry. With an attractive portfolio of award-winning original productions and third-party content as well as strong brand, we believe Netflix is well placed to grow and maintain market share as adoption of OTT increases.

After releasing results which highlighted impressive growth across its brands early in February, Estee Lauder performed strongly. Beyond its Estee Lauder branded products, the cosmetics company’s brands include Clinique, MAC and Origins; the strength of such brands have helped it achieve pricing power and consumer loyalty, and as a result we have seen the company increase its market share. The company is family controlled, and members of the Lauder family remain involved in the management of the company today. We think this helps to preserve the long-term mind-set and alignment of interests between shareholders and management, which we look for in companies.

MasterCard was another notable contributor. While cash still dominates when it comes to global payments, the increasing adoption of card-based payments looks set to continue. Key factors supporting increased use of cards include the growth of online retailing, innovations such as mobile point of sale technology and the growing use of prepaid cards. We believe that the increasing use of paperless payments over time and a continuing shift away from cash as a medium of exchange offers long-term investors attractive growth opportunities.

Shoprite, South Africa’s largest retailer was the most significant detractor over the quarter. Weakness in the South African consumer and disruption to supply caused by the roll out of a new resource planning system provided the company with short-term headwinds, but which we think it can overcome. Shoprite operates across the consumer income spectrum through its lower income-focused Usave stores right through to Checkers, which targets relatively more wealthy consumers. The company has been expanding further into Africa and now has stores in major developing markets like Nigeria and has also entered the likes of the Democratic Republic of Congo and Uganda. As incomes in developing economies increase, the demand for a high quality of packaged foods and household goods should rise, creating opportunities for strong local brands to benefit.

Specialty chemical company Elementis also detracted with its share price having declined since the announcement of the company's acquisition of Mondo Minerals last year. This is a significant acquisition but we believe that Elementis’ management team’s pursuit of greater exposure to higher margin products will ultimately benefit the company over the long term. Elementis’ products include additives for lubricants, Hectorite clay for personal care products and rheology modifiers for industrial coatings. Elementis is uniquely positioned to provide such products given their strong competitive advantage and the fact that they own the world’s only commercially viable Hectorite mine.

There has been weakness in the share prices of video games companies in recent times and Actvision Blizzard has been among our detractors. In February, Electronic Arts, which we also have a position in, released its free-to-play battle royale game Apex Legends, a release which saw the share prices of the other major gaming companies decline. The rise of free-to-play games like Fortnite and PUBG does present challenges to the gaming industry, a narrative which has caused some volatility in the share prices of gaming companies.

However, we continue to be attracted to the strength of Activision Blizzard’s franchise with its titles, such as Call of Duty, having inspired significant player loyalty over many years. While free-to-play is a trend within the industry, there is also a trend demanding higher quality from developers, something which requires deep pockets and thereby favouring companies with the scale of Activision Blizzard. With its competitive advantage remaining in-tact, we continue to think Activision Blizzard is well-positioned moving forward. 

Discrete year performance Janus Henderson Global Equity Fund (%) MSCI AC World Index (%)
1 year to 31/03/2019   10.28 12.62
1 year to 31/03/2018      5.15    1.80
1 year to 31/03/2017   32.80 32.68
1 year to 31/03/2016     2.22   0.29
1 year to 31/03/2015   28.36 19.72
* Source: Morningstar, at 31 March 2019, 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

We initiated a new position in Unilever in January. Unilever is a leading global consumer products company which now derives more than half of its revenues from emerging markets, benefiting from demographically-driven growth in consumption. The company has a number of very attractive brands including Ben & Jerry’s, Knorr and Hellman’s, and is a high quality, cash generative business.


As ever, our strategy is to avoid making major macroeconomic calls, and to instead focus bottom-up on finding companies with underappreciated growth and high barriers to entry at attractive valuations. Through purchasing undervalued securities that are exposed to strong secular tailwinds of growth, we aim to generate attractive returns over the longer term.

Janus Henderson Investors

201 Bishopsgate, London EC2M 3AE

Tel: 020 7818 1818 Fax: 020 7818 1819

Important Information

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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.

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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.

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