Meet the Manager - Henderson EuroTrust

Tim Stevenson joined Henderson Global Investors in 1986 and has been managing European portfolios since 1984. He has been involved in Henderson EuroTrust plc since its launch in 1992 and has been manager since October 1994. He also manages the European portfolios of The Bankers Investment Trust PLC and the Law Debenture Corporation plc. He describes his investment style as stock picking with a growth bias. 

Fund Manager's Commentary - April 2013

Markets eked out another small gain in April, nervously progressing in the face of continuing poor economic news and a mixed political backdrop. The process of a rerating of equities continues, on optimism that economic recovery will start to come through later this year, and perhaps given a growing reluctance to invest in other asset classes. Politics has been somewhat tortured during the last few weeks, but also quite significant. Italy, finally, has a government led by the widely respected Mr Letta, after Mr Napolitano’s reluctant return to the post of President. Mr Napolitano’s angry wake-up speech to politicians was a useful reminder that Italians themselves know what is needed. We also saw European Commission President Barroso join the growing bandwagon of ‘austerity cannot create growth’ calls; there is an increasing feeling that we could be about to move into a more positive growth impetus stage. Quite how this is created is of course not yet clear, but the timing is useful, as Germany will not wish to play too hard a line ahead of elections in September.

We have had quite a busy month, and have added to our banking sector exposure. At the quality end of the sector we added Barclays, which we believe will achieve a decisive turnaround, while additions in our ‘trading book’(which will not exceed 5% of the total fund) included Unicredit and Credit Agricole. Both Italy and France remain quite vulnerable with weak economies, but we feel that this is reflected in the extremely low valuation levels for these two banks. We sold AstraZeneca out of the trading book following some modest gains. We also sold Continental, as we feel the sharp devaluation of the yen could put some pressure on some areas of highly successful German industry at a time when auto sales are still very weak. We also sold Petrofac, the oil services company.

There is a two-way pull in sentiment: investors are cautious due to economic weakness and dull results, but optimistic due to low interest rates and growing confidence that growth will resume in the second half of 2013 and into 2014. In the markets buying on weakness continues and, interestingly, poor results have in many cases been met with rising share prices, especially where analysts and investors have chosen to focus on improving order books. As always there are likely to be volatile days, but the overall trend looks to be better, and we are maintaining an almost fully invested stance.