Suits investors prepared to take a relatively higher risk in the volatility of their investment to receive potentially higher rewards. It seeks to provide long-term capital growth from UK companies. Income is of secondary importance.
Henderson Opportunities Trust plc aims for a higher-than-average rate of capital growth over the medium-to-long term, from a portfolio of recovery and 'special opportunities' stocks mainly in the UK.
The UK equity market has put in another positive performance, making ten straight months of gains, despite some dramatic developments in the Eurozone. March saw the peak of the corporate results season when calendar year-end companies report their results. By and large the results season was a positive one with upgrades outnumbering downgrades by 54% to 46% (source: Peel Hunt). This in turn has fed through to positive dividend announcements. The prospects for 2013 for most companies are usually described as ‘cautiously optimistic against a difficult macroeconomic background’. The difficult background in question includes situations like the Cypriot bailout, which erupted onto the world stage during the month. The real game changer here was not that the Cypriot banking system and government were bust but that the solution imposed by the other members of the Eurozone and the IMF meant that for the first time ordinary retail depositors were having funds claimed from them to fund a bailout rather than the taxpayer. Whilst that has been a negative on the other side of the Atlantic, the US economy has shown increasing signs of shaking off fears around the fiscal cliff as job creation and consumer confidence continue to grow.
Our market activity in March was measured. Again we have taken some profit off the table in some good performing stocks, like Interserve, the facilities and building services company, and our largest position, Retroscreen Virology, the clinical trials specialist. In both cases we have retained core positions for the long term. We have added to our recent new holding in Advanced Computer Software and also in Tribal, educational services and software, which produced some very pleasing results, and in Tracsis, software and services to the transport market, which has made its first significant acquisition, which broadens the group’s operations into Australia for the first time. Our biggest positive contributor was Retroscreen and our biggest negative was SDL, where additional investment will depress profits this year.
The net asset value (NAV) rose by 2.0%, including income, against the FTSE All-Share Index which rose by 1.4%. The best performing index was the FTSE Small Cap (XIT) which rose by 2.1% whereas the FTSE AIM Index fell by 1.1%. Gearing rose modestly to 11.5% reflecting the modest net investment referred to above.