Over the six months ended 30 April 2015, Henderson Diversified Income outperformed its benchmark, generating a total return on net assets of 5.2% as compared to 1.3% for the benchmark (three month sterling Libor plus 2.00%). The share price return was 5.9%. They have declared dividends totalling 2.5p for the period.
The manager says sovereign bonds and investment grade corporate bonds performed well given the deflationary backdrop. High yield bonds also performed well but often at different times to the more interest rate sensitive investment grade bonds. Loans lagged a little in comparison but achieved a reasonable return.
The longer dated investment grade financial and industrial bonds were the best performers and again the legacy tier 1 banking bonds were very reliable performers for the Company. As the Company grew as a result of share issuance (they issued over 19m new shares), the Company purposely reduced its floating rate exposure (secured loans) in favour of fixed rate bonds and tried to reduce our exposure in loans denominated in euros in favour of sterling and US dollars.
They have positioned the portfolio so that it has little exposure to bonds in the energy, retail and food sectors – where they expect underperformance. They have also been selling loans trading at a premium to their nominal value and reinvesting the money into new loans. The statement highlights two loans that they sold – Constantia Flexible (Packaging, Austria) and Intertrust (Financial Services, Netherlands).
HDIV : Henderson Diversified Income benefits from deflationary backdrop