Henderson European Focus Trust has announced its interim results for the six months ended 31 March 2016. During the period, the company provided an NAV total return of 6.3%, thereby mildly underperforming its benchmark, the FTSE World Europe ex UK Index, which returned 6.7%. In contrast to this, and reflecting a widening discount during the period, the trust’s share price total return was a fall of -1.5%. The Board has declared an interim dividend of 7.5p per ordinary share (2015: 7.0p), which is a 7% increase over the prior year interim dividend. The Board says that it remains confident that the Company’s progressive dividend policy will continue and believes that, in the absence of unforeseen circumstances, the final dividend will be at least maintained.
The manager says that the past six months have been fairly challenging for the trust’s strategy as a number of their sector and stock selections have faced some headwinds. Most notable has been the poor performance of pharmaceutical stocks, which have faced a number of challenges in recent months. The manager says that these have ranged from the intensifying and voluble debate over US drug pricing, the fallout from a deflating US biotech bubble and the collateral damage from the share price collapse of former hedge fund favourite Valeant, also in the US.
The manager comments that they had already reduced the weighting in the portfolio from its peak of a year or so ago, but says that they continue to favour it as a core, long term theme. Morevoer, following recent falls, they see compelling long term value in stocks such as Bayer and Novartis.
In terms of portfolio activity, two new smaller-medium sized stocks have been added – Rubis, a French oil storage business and Rockwool, a Danish manufacturer of building insulation materials. Also within the mid cap sphere, the managers have built exposure to the European cable media sector via holdings in Com Hem, Euskaltel and NOS. They say that the attractions of each of these franchises lie principally in their cash generation, in a sector where they expect to see further consolidation.
Henderson European Focus’ NAV performs broadly in line with index :HEFT