Henderson High Income Trust - Update from QuotedData
14th December 2023
Improving outlook on a double discount
Henderson High Income (HHI) has recently announced that Henderson Diversified Income will be merged into it, subject to shareholder approval, which will add advantages of scale to HHI in the coming months, such as enhanced liquidity and the possibility of lower charges.
For the new HHI shareholders, the timing of this merger may be fortuitous, as HHI's manager David Smith believes that a number of key risks facing the UK equity market are reducing: it is likely to avoid a material recession, inflationary pressures have diminished, and political risk should fall away as the next government seems likely to be more centrist.
David's bullishness has led him to rotate HHI into unloved UK mid cap companies, while also increasing HHI's bond exposure to take advantage of higher returns on offer. The combination of the valuation discount on UK stocks with HHI's current share price to net asset value (NAV) discount of 8.4% (which is below its three-year average) offers an attractive entry point based on its apparent undervaluation.
Full Research:
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