Repositioning to raise total returns
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Edison Investment Research Limited
London, UK, 25 April 2024
Edison issues update on Henderson Far East Income (HFEL): Repositioning to raise total returns Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness to use reserves when necessary to support dividend payments, which it did in FY23. This reduces the requirement to focus primarily on high income names to fund dividend payments, giving lead manager Sat Duhra scope to move into other areas of the market where he can acquire well-priced value names offering performance and yield, or the prospect of dividend growth over time. Duhra has been quick to reduce the trust’s exposure to China and increase positions into well-priced value names in India and Indonesia. Early signs suggest this repositioning is paying off - HFEL outperformed the market in the six months to end March 2024. HFEL’s shares are currently trading at a premium of 1.5%, not far from their long-term average premium of 2%. Further improvement in total returns resulting from recent portfolio changes should provide continued support for HFEL’s shares. Click here to view the full report. All reports published by Edison are available to download free of charge from its website About Edison: As a content-led investor-relations business, Edison helps companies stand out and meet the right shareholders. Edison’s integrated investor relations solution combines expert analyst content, digital targeting and active investor engagement. This drives liquidity and valuations by building bigger, better informed and more engaged investor audiences globally. Edison has a proven history of increasing liquidity and valuations for its clients. Edison’s content can be viewed by all investors, anywhere in the world. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison’s reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Joanne Collins +44 (0)20 3077 5700 investmenttrusts@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn https://www.linkedin.com/company/edison-group-/ Twitter www.twitter.com/Edison_Inv_Res YouTube http://www.youtube.com/edisonitv
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1889661 25-Apr-2024
