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Henderson UK Absolute Return

Elite Rated by FundCalibre

This is a stock-picking fund that aims to deliver 10% per year in all market conditions. The managers look to identify stocks that will either exceed or fall short of analysts’ expectations, and construct a portfolio of both long (profit when price goes up) and short (profit when price goes down) positions. There are limits on the overall market exposure, which serves to reduce the volatility of the fund. This fund has a performance fee.

Company Description

Janus Henderson is the product of a merger between Henderson Group and Janus Capital Group. Trading on the New York and Australian stock exchanges, the group was formed in May 2017 to form a greater collective and benefit from expanded product ranges and a larger pool of talent employed.

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Fund Manager

Ben Wallace has run this fund since launch in 2009. He has also run another fund, which employs a similar strategy, since 2004. The team outsource risk management to an expert third party, which aims to prevent unforeseen risks creeping into the portfolio. Co-manager, Luke Newman, joined the team in March 2011 and has previously managed absolute return funds at Altima Partners LLP.

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Long/Short fund investing in large cap UK listed companies, looking to provide an absolute (more than zero) return every year whilst also using derivatives to attempt to achieve this.

Ben Wallace - Fund Manager

The Investment Process

This is a long/short UK equity fund with two thirds of the portfolio in shorter-term tactical ideas, where the managers believe an earnings surprise could be imminent. The remainder will be in core holdings, where the managers think there are long-term drivers in place that will either increase or decrease the share price over time. Strict limits are place on the overall market exposure.

Risk

The fund’s performance is driven by the managers’ stock-picking skills, which means the main risks relate to whether or not they buy (or choose to short) the ‘right’ companies. Historically the fund has been around a third to a half as risky as the UK stock market.

Our Opinion

While the fund was launched in 2010, the strategy and the team have a much longer track record running another identical mandate. During that period, the returns have been remarkably consistent. In a nutshell, we like this fund as, unlike many of its sector peers, it has achieved its stated aim, which is to provide equity-like performance, but with one third the volatility.

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