Buying good companies at attractive valuations

London, UK, 24 January 2024

Edison issues update on Henderson International Income Trust (HINT): Buying good companies at attractive valuations

Henderson International Income Trust (HINT) is meeting its long-term objectives to provide both rising income and capital appreciation. It adopted a more generous dividend policy in 2021 and its 4.7% dividend yield is the highest among its peers. HINT has also delivered average annualised gains of 8.4% in NAV terms over the 10 years ended December 2023. However, the manager’s cautious, balanced stance, which favours value and defensive names and underweights the US, has underperformed recently due to the AI-driven rally in a handful of tech stocks and the improvement in the United States’ economic outlook, which has benefited cyclical names. However, HINT’s manager is using what he believes to be unjustifiably low valuations to add good companies with the capacity to grow dividends, at attractive prices. This includes businesses exposed to structural trends such as decarbonisation and the rapid spread of technology. He expects such acquisitions to outperform as the market comes to fully appreciate their merits.

HINT appears attractively valued by historical measures, as its discount is much wider than the average of 1.4% over the past 10 years. This offers investors a potentially attractive entry level and suggests there is scope for the discount to narrow as and when performance returns to form. A decline in HINT’s ongoing charge to 0.72% for the year ended 31 August 2023, from 0.83% in the previous year, arguably makes it a more attractive proposition for investors.

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