Henderson High Income’s results for the year that finished on 31 December 2014 are quite good. The total return on net assets was 7.5% and the return to shareholders was 8.1%. these figures compare to a return on their benchmark, a composite of 80% of the FTSE All-Share Index (total return) and 20% of the Merrill Lynch Sterling Non-Gilts Index, of 3.4%.
The return on the equity part of their portfolio, managed by Alex Crooke, was 7.4% which compares well to a 1.2% return on the FTSE All-Share Index over the period.Being underweight oil stocks was good news for the company. Holdings in National Grid, United Utilities and British American Tobacco performed strongly. Elsewhere positions in Catlin, Reed Elsevier and the house builders, Persimmon and Galliford Try, also produced good returns. Catlin was subject to a bid approach in the period while Reed Elsevier announced strong profit growth. They say Persimmon and Galliford Try are both displaying good capital discipline by prioritising cash returns to shareholders over excess land buying.
In the bond portfolio their return was held back by being positioned more in shorter dated bonds. The portfolio delivered performance of 9.5%, behind the 12.3% return from the Merrill Lynch Sterling Non-Gilts Index.
The dividend for the year was upped from 8.4p to 8.6p.
The Board has revised the fee arrangements – it’s a bit complicated so we have reproduced this in full – “with effect from the 1 January 2015:
- the base management fee will be charged against gross assets less current liabilities other than loans or other debt for investment purposes treated as current liabilities;
- performance will be measured using the net asset value total return per ordinary share relative to the benchmark equivalent;
- 1.0% will be deducted from any relative outperformance before any performance fee can be paid;
- the cap on total fees in any one financial year (base management fee and performance fee) is reduced from 1.5% to 1.0% of gross assets less current liabilities other than loans or other debt for investment purposes treated as current liabilities; and
- any unrewarded outperformance above the cap may be carried forward for a maximum of three years but may only be used to offset any underperformance. It cannot in itself earn a performance fee.
The effect of this should be to bring down fees overall.
HHI : Henderson High Income outperforms, cuts fees