Europe has stumbled from one crisis to another since 2008. But as investors have deserted Europe, its equity markets full of world beating companies has witnessed historic lows. Leading manager John Bennett has turned bullish for the first time in several years. We take a close look at his fund Henderson European Focus trust and examine the investment case for Europe.
John Bennett has been running Henderson European Focus Trust (LON:HEFT) since late 2010, when it was known as Gartmore European. Since his appointment he’s radically altered its portfolio, shrinking it to a concentrated collection of 57 stocks.
He’s done this because he thinks it gives him a better opportunity to add Alpha or to beat the market. This can happen because of the greater effect individual stocks have in a more concentrated portfolio by virtue of the fact that they represent a larger overall holding.
It he gets his stock choices right investors will indeed grow wealthier. If he gets it wrong the losses in a concentrated portfolio will be amplified just as much but in the opposite direction from the one he’d planned.
Performance
The Net asset value or NAV is up 15 percent since John Bennett took over. Over the past 12 months its up 22 per cent as against 15 per cent for its benchmark.
The discount the NAV is currently 11 per cent, which is below its 12 month average of 13 per cent. This does of course mean that new investors are buying in to the fund at less than the value of the underlying assets. If the discount should narrow investors doubly benefit from a narrowing discount and increasing share price.
The reverse if of course true too if the discount widens and the share price falls.
The fund is yielding 3 per cent.
The manager
John Bennett is an alumnus of Ivory & Sime, the once great Edinburgh fund manager where so many good fund managers seemed to have started their careers, and whose remnants are now to be found within F&C asset management. He spent 17 years at GAM, where he successfully managed European portfolios and enjoyed high ratings from analysts.
According to Trustnet he manages or co-manages six European funds at Henderson. Over a 10 year…
