London, UK, 13 December 2023

Edison issues update on Henderson EuroTrust (HNE): Good stock selection outweighing headwinds

Henderson EuroTrust’s (HNE’s) manager, Jamie Ross, is heartened by the trust’s outperformance in FY23 despite investors favouring lower-quality value stocks. This result was achieved through successful stock selection. The manager employs a long-term view, seeking high-quality companies with high or improving returns. He also has a mid- and long-term record of NAV outperformance versus the Europe ex-UK market, although the trust encountered a protracted period of style headwinds between Q121 and Q222. In absolute terms, over the last decade, HNE’s NAV total return of 9.4% per year is comfortably ahead of the market’s 8.0% annual total return. European stocks are trading at a meaningful discount to global peers and with the trust continuing to be valued at a double-digit discount, now could be an opportune time to consider a portfolio of high-quality companies where the manager has a proven strategy of successful fundamental stock selection.

With its focus on generating a superior total return, alongside seeking capital growth, HNE also offers a dividend yield, which ranks highly versus most of its peers in the AIC Europe sector. In FY21, the board announced a change in the company’s dividend policy, whereby distributions would be broadly based on the level of income received. At the time, the trust had significant revenue reserves, which were paid out in FY21 and FY23. The board has recently announced that due to the pattern of income receipts, there will now be a single annual dividend payment rather than a modest interim and a larger final dividend.  

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