In this snippet from the latest episode of Trust TV, Henderson Diversified Income Trust Co-Fund Manager, John Pattullo, explains why he and the team are optimistic about US bond performance; and breaks down his view on why inflation is likely to remain low for the foreseeable future. To watch the full interview, click here.
Interest rates have plummeted. Bond yields have collapsed to historic lows. Accordingly, in the pursuit of income, UK investors have sought refuge in equities, despite their higher volatility … but all too often have been seduced by yields that are inflated simply as a consequence of depressed capital values. This piece explains how to exercise care when selecting stocks in the current climate in order to avoid falling into the ‘yield trap’.
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Mike Kerley, Co-Fund Manager of Henderson Far East Income Trust, discusses the Trusts recent performance and which areas of the portfolio are specifically driving this performance. Mike also discusses how he believes a 2021 recovery will look for income investors and discusses the latest activity within the portfolio and where in Asia the team are looking to find dividend growth.
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Entire tomes have been devoted to investing in the financial services sector – hardly surprising when you consider its size, and therefore its significance to the world’s capital markets. To say the financial sector is large doesn’t do it justice. Of the total market capitalisation of the S&P 500, the world’s largest stock market index, financials account for just under 10% of the $28.5 trillion valuation.1 Turning our attention to the UK market, the sector’s dominance is more pronounced still, representing over 25% of the entire market capitalisation of the FTSE All-Share Index.2
It is not merely its size, however, that has led the financial services sector to be referred to as the ‘nervous system of capitalism’, it’s the fact that it permeates almost every aspect of corporate and personal daily life, forming a critical component of the world’s economic engine. Make no mistake – a modern economy simply cannot exist without a well-developed financial system given its breadth and depth, the sector comprising a diverse range of industries including banks, investment managers, insurance companies, mortgage lenders and real estate firms amongst others, all of which provide the services required to help keep ‘Main Street’ functioning on a daily basis. It includes some of the largest organisations on the planet – from insurer Allianz, to asset manager Berkshire Hathaway to retail and commercial bank Citibank – together with many thousands of smaller players in every region of the globe.
A new-found resilience
Over recent years, the financial sector has not been without its detractors, and understandably so. The blatant self-interest which permeated its ranks at the turn of the century culminated in the financial crisis of 2007–2008, also known as the global financial crisis (GFC). Patently imprudent loan underwriting by banks led to the collapse of the US sub-prime mortgage market and caused the value of sub-prime lending to go into freefall, damaging financial institutions globally and precipitating the bankruptcy of Lehman Brothers on 15th September 2008, an international banking crisis and the most severe global recession since the Great Depression of the 1930s. Europe was not insulated from its effects, with bank bailouts widespread across the region, totalling £500 bn in the UK alone. All three of Iceland’s major banks failed – relative to the size of its economy, it was the largest economic collapse suffered by any country in history.
In this latest episode of Trust TV Mike Kerley, Fund Manager of Henderson Far East Income, discusses the impact of COVID-19 on the Trust and the Asian markets in general. Mike also discusses his plans for the Trust over the next 10 years and how he and the team incorporate ESG to their investment strategy. Find out more here…
This is a sponsored post by Janus Henderson. These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. The information in this article does not qualify as an investment recommendation.
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Henderson High Income Trust celebrated its 30th anniversary in 2019, having launched in 1989. This was the same year that Tim Berners-Lee invented the World Wide Web. Given Henderson High Income provides shareholder with a high dividend income by predominately investing in UK companies, this article looks at how the internet has led the UK market to evolve and created opportunities and challenges for income investors.
One of the main influences that the internet has had on the corporate world is the increase in globalisation. The internet has facilitated fast and efficient communication, global IT infrastructures, electronic payment systems and the mobility of capital. The impact of globalisation on the UK has seen an acceleration away from manufacturing towards a service led economy. This shift has been mirrored in the FTSE 100 with industrials and domestic companies making way for more multinational businesses.
