Fund Performance review
The Janus Henderson Global Equity Fund outperformed its benchmark, the MSCI All Country World Index, over the quarter returning 5.1% versus 5.0% respectively.
At the sector level, the fund’s exposure to the consumer discretionary and consumer staples holdings both contributed strongly to performance. Meanwhile, positions in the healthcare sector, in aggregate, detracted from performance.
Tiger Brands, a South African consumer staples company, was the most significant positive contributor to performance over the period. The company enjoys very strong market positions in its native South Africa, while it is also selectively pursuing expansion across sub-Saharan Africa, looking to benefit from the favourable demographics that exist in the region. As incomes in these developing economies increase, the demand for high quality packaged foods and household goods continues to rise, creating opportunities for strong local brands to benefit.
Amazon.com was another notable contributor. One of the long-term secular growth trends we see continue to develop in a sustainable and predictable manner is that of the transformational impact of the internet, which is dramatically changing a variety of business models. While the growth of ecommerce seems fairly obvious, penetration levels still remain low, with less than 13% of US retail sales coming from online and less than 3% in Latin America. This powerful driver continues to benefit Amazon.
One of the fund’s smaller holdings, Draegerwerk AG, was the largest detractor from performance over the period. The company, a family controlled medical and safety equipment manufacturer based in Germany, announced it would be increasing the level of investment in its research and sales teams in order to support future growth, depressing profits for the next couple of years.
|Discrete year performance
||Henderson Global Equity Fund (%)
||MSCI AC World Index (%)
|1 year to 31/12/2017
|1 year to 31/12/2016
|1 year to 31/12/2015
|1 year to 31/12/2014
|1 year to 31/12/2013
* Source: Morningstar, at 31 December 2017, 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
Portfolio activity included the initiation of a position in Microsoft. 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 (XBOX), search advertising & devices. Microsoft's virtual 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 doing with increasing success. Microsoft will also have a potentially enormous market opportunity in offering cloud services, with spend on “cloud” currently a small portion of the overall Enterprise IT market. With Microsoft generating cash earnings well in excess of reported earnings, we believe the company’s valuation is compelling.
We also took a position in Taiwan Semiconductor Manufacturing Company (TSMC). In our opinion, the valuation looks attractive for the world’s largest semiconductor manufacturing company. Its growth prospects are helped by the continued shift towards greater outsourcing of production to foundries, and TSMC’s scale continues to drive research and development (R&D) spend well above that of its industry peers.
Sales included our position in leading South American ecommerce company MercadoLibre. A pullback in the share price had given us the opportunity to initiate a position in December 2016. Since that point the share price has risen strongly and we have subsequently sold the position. We also exited positions in Check Point Software and Fidelity National Information Services, two information technology companies which had passed through our price targets.
Fund manager's outlook
The fund’s 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 significant absolute and relative returns over the longer term.
Janus Henderson Investors
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Tel: 020 7818 1818 Fax: 020 7818 1819
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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.
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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), 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.]
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All data as at date indicated, unless otherwise stated.
: Willis 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.