Trustnet Magazine Issue 44 October 2018 | Page 22

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same vein we have added European
stocks to the portfolio during the
past four or five months. Amid the
sell-off of European stocks we have
found that they do exhibit very good
value – particularly global stocks that
are domiciled or listed in Europe but
derive a significant proportion of
their earnings from overseas. We see
those trading at quite a big discount
to their peers elsewhere.
At the moment we are not using
the gearing facility. We have been
very active with gearing in the
past and generally we use gearing
in a countercyclical manner. That
means we’ve used gearing when we
see markets selling off significantly
during periods of volatility and
valuations come down to the point
that they offer very attractive
opportunities.
We’ve had quite strong markets
for a few years and we’ve got quite
a lot of political noise as I discussed
earlier. I think we’d like to keep a
bit of powder dry and hold back
on gearing simply to make sure we
have some room to take advantage
of opportunities if they arise. These
opportunities may not come at
the complete market level, but
they could come in specific areas
and sectors as a result of trade
discussions, for example.
I am often asked about gearing
FE TRUSTNET
[ JANUS HENDERSON ]
20 / 21
Glossary
Gearing: A measure of a
company’s leverage that shows how
far its operations are funded by lenders
versus shareholders. It is a measure
of the debt level of a company.
Within investment trusts it refers to
how much money the trust borrows for
investment purposes.
Volatility: The rate and
extent at which the price of
a portfolio, security or index, moves
up and down. If the price swings up
and down with large movements, it has
high volatility. If the price moves more
slowly and to a lesser extent, it has
lower volatility. It is used as a measure
of the riskiness of an investment.
Countercyclical Investing: Picking
stocks that move in the opposite
direction to the overall economic
cycle – rising when the economy
is weakening and falling when the
economy is rising.
and recently I’ve been asked about
the effect of rising interest rates on
the cost of borrowing money. What
you find is that any changes to the
income characteristics of a portfolio
as a result of small interest rate
changes tend to be insignificant.
So, the benefit that you get from
being geared in a rising market
would outweigh the additional cost
of gearing and in the same way if
markets fall significantly, the lower
cost of gearing that you might get
from interest rates going down
largest companies and how willing
they are to distribute their cash.
On the basis of the second quarter
of 2018, things are going well. We
have seen headline growth of just
over 12% and underlying growth
of 9.5%; we are seeing it broadly
spread over industries and regions;
we’ve had some records for some
regions, such as the US, Japan
and Europe; and we’ve seen some
doesn’t really help you anywhere
strong growth from sectors such as
near as much as the impact of falling mining and the financial services
net asset value (NAV).
areas, particularly banks.
The growth is so strong that we
Optimism overseas
had to increase our global dividend
Looking ahead to the remainder of the forecasts for the year from 6% to
year, what I can say is we’re meeting a 7.4%, so in the absence of further
lot of companies that we own, of which geopolitical events it would seem we
there are many that are reporting on
are set for a bumper year for dividend
their financial health at the moment,
growth. We think the portfolio is well
and generally the trends are good.
positioned and well diversified to
Janus Henderson publishes
capture dividend growth outside the
a Global Dividend Index each
UK, where there is good momentum
quarter which effectively shows
and earnings growth potential across
the corporate health of the world’s
many regions.
I think we’d like to keep
a bit of powder dry and
hold back on gearing
simply to make sure
we have some room
to take advantage of
opportunities if they arise
Before investing in an investment trust referred to in this article, you should satisfy yourself as to its
suitability and the risks involved, you may wish to consult a financial adviser. 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. Nothing in this article is intended to or should be construed as
advice.  This document is not a recommendation to sell or purchase any investment. It does not form part of
any contract for the sale or purchase of any investment.
Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus
Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355),
Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757),
Henderson Equity Partners Limited (reg. no.2606646), (each incorporated and registered in England and
Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the
Financial Conduct Authority to provide investment products and services. 
© 2018, Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited,
Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC.
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