Henderson Opportunities trust starts to trim portfolio

30 January 2012 | By Gary Jackson

According to the £47.6m trust’s annual financial report, the fund’s net asset value (NAV) total return fell by 4.7% in the 12 months to October 31. The FTSE All-Share index benchmark’s total return for the same period was 0.6%.

The main detractor from performance was stock selection, the manager claims, accounting for 3.9 percentage points of the 5.3% relative loss. Expenses took 1.2 percentage points of performance, while gearing lost 0.2%.

In his report, Henderson says: “The number of holdings is likely to fall over the coming year as we believe in this difficult economic period fewer companies will achieve strong growth and those that do will obtain a premium valuation.”

The trust’s factsheet for November shows a number of stocks were sold out of the portfolio over the course of the month.

Retailer JJB Sports and sweetener producer PureCircle were sold after the manager judged his goals for the stocks to be “unachievable”. Emerging markets paper and packaging company Mondi was sold to take profit.

During November, the trust also took new positions in wound care firm Advanced Medical Solutions and gas development company Aurelian Oil & Gas.

In his statement, Henderson adds the use of gearing to invest in smaller companies created “marked volatility” in the trust’s NAV last year. Smaller firms are often more sensitive to economic turbulence and they suffered during the final months of the trust’s financial year.

“Therefore we will be more active tempering this volatility by increasing the exposure in larger companies where there is gearing so that there is liquidity and flexibility in the portfolio,” the manager adds.

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