Wins endorses Peak replacement on Henderson trust

Henderson’s appointment of Ollie Beckett as manager of its TR European Growth investment trust is a positive development, says Winterflood Investment Trusts (Wins).

Stephen Peak
Stephen Peak

Beckett is to replace Stephen Peak as manager of the £259m investment trust on July 1, allowing Peak to concentrate on his role as the head of UK and European equities at Henderson. Peak has run the fund since its launch in 1990.

Simon Elliott, the head of research at Wins, says the portfolio will “return to its stockpicking roots” under Beckett, who joined the pan European equities team at Henderson in 2005 and the team running TR European Growth in 2011.

Beckett manages the €450m (£400m) open-ended Henderson Horizon Pan European Smaller Companies fund. As a result, Elliott says, under Beckett’s stewardship TR European Growth will place less of an emphasis on large cap companies and speculative plays.

“The appointment of Beckett is a positive development for TR European Growth,” Elliott says. “The renewed emphasis on small cap investing makes sense, in our opinion, as there are clearly inefficiencies in the European small cap universe that an active manager can exploit.”

Up until November last year the trust had a discount control mechanism (DCM). The mechanism was designed to keep the discount at which its shares traded to its assets at about 2%. However, Elliott says the DCM hampered Peak in that it effectively forced him to buy larger stocks, which were easier to sell if the trust needed money to fund the DCM’s share purchases.

The DCM was removed by shareholders at the trust’s annual general meeting in November last year. The trust’s discount to its net asset value has subsequently moved out to 16.5%, which Elliott says represents “a value opportunity”.

“If the new manager can improve the performance record, we would expect the fund to trade in line with its peers,” adds Elliott. “In addition, if Europe were to come back into favour as an investment mandate, we believe that there is scope for the sub-sector to be re-rated as a high growth play.”

According to FE Trustnet, over three years to date the trust’s NAV has risen 13% compared with its benchmark, the HSBC European Smaller Companies (ex UK) index, which is up 24.8%.

Despite having a strong performance record since launch, Elliott notes that 2008 was a difficult year, with performance hit hard, partially owing to a high weighting to the resource sector. In 2009 he notes the trust outperformed, despite high cash levels, as a result of strong stock selections.

“So far in 2011, the fund’s NAV is unchanged compared with a rise of 2% for the benchmark,” he adds.