Janus Henderson Global Equity Fund Q3 2018 report

Posted by Guest in Fund and industry updates category on 22 Oct 18


Fund Performance review

The fund returned 5.3% over the quarter, under-performing its benchmark index, the MSCI ACWI, which returned 5.7%.

At the sector level the fund had significant positive contributions from holdings in the information technology (IT) and industrials sectors. There were no significant detractors from a sector perspective.

Apple was the largest positive contributor to performance. Its shares rose to make Apple the world’s first trillion dollar company in August and recent results revealed extraordinary revenue growth for a company of that size. We have been long-term owners of Apple, sharing in the benefits from its consistent superior business performance. Much attention is paid to Apple’s product cycle and product launches but what attracts us is the stickiness of its user base, spreading from the iPhone itself to products like the iPad, MacBook, iTunes and the operating system. This stickiness creates a significant recurring revenue opportunity over the long term.

Microsoft also performed well. The company has three main segments: Productivity & Business Processes (which includes the Office platform), Intelligent Cloud (which incorporates Azure and other enterprise services), and More Personal Computing (which consists of Windows, gaming such as the XBOX, search advertising and devices). The company's monopolistic market position in Office and Windows make it well placed to provide these products on a software-as-a-service basis, which it is increasingly doing. Microsoft also has a very large opportunity in cloud services with spend on cloud currently a small portion of the huge Enterprise IT market. We think the share price valuation looks attractive as in our view it does not currently reflect its true earnings power, with Microsoft generating cash earnings well in excess of its reported earnings.

Another strong contributor was Irish clinical research organization (CRO), ICON. CROs help pharmaceutical and biotech clients launch new drugs by managing the clinical trial process. The complexity of running clinical trials has increased markedly in the last 20 years, with regulators requiring more data and longer treatment periods to prove the safety and efficacy of drugs. The resulting increase in costs has encouraged the outsourcing of more and more of this work to specialised CROs, but with the addressable market less than 50% penetrated currently, and with the top five firms only accounting for 40% of this, this is a long-term trend we see continuing for many years to come. Icon sets itself apart within its industry by having an exceptional track record of operational performance, an innovative approach to adopting new technologies, and a balance sheet that provides significant financial flexibility.

The fund’s position in South African Consumer Staples companies Shoprite, a supermarket retailer, and Tiger Brands, a packaged foods company, were among the detractors over the quarter. South African equities have been caught up in the broader emerging markets sell-off. While these companies face short-term consumer-related weakness, the outlook for both companies is strong as they pursue disciplined expansions across sub-Saharan Africa and look to benefit from the favourable demographics that exist in the region. 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.

Discrete year performance Janus Henderson Global Equity Fund (%) MSCI AC World Index (%)
1 year to 30/09/2018   16.94  15.07
1 year to 30/09/2017   19.40 15.05
1 year to 30/09/2016   29.97 30.63
1 year to 30/09/2015    9.67  2.13
1 year to 30/09/2014   11.97 12.68
* Source: Morningstar, at 30 September 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

In terms of activity, we initiated a new position in Intercontinental Exchange (ICE), a leading financial markets exchanges and clearing house operator. ICE is well positioned to benefit from positive volume trends in over-the-counter derivatives trading as well as through the provision of data and clearing services.

We sold our position in Facebook in July. We have been concerned with Facebook’s engagement on corporate governance and social issues for some time. While we believe the company is taking these matters seriously, the requirement for incremental investment in security and further spend guided on other areas promises margin compression and as a result we have decided to exit the stock.

We also sold AmerisourceBergen. Recent results have highlighted that the downtrend in the pharmaceutical distribution business now appears more structural rather than cyclical. Finally, we also sold PZ Cussons, a UK-listed consumer goods company. 

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.  

The views and opinions contained herein are third party and may not necessarily represent views expressed or reflected by Willis Owen. 

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