Henderson duo see hit to short-term performance
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Henderson Multi-Manager Income & Growth fund managers Bill McQuaker and Chris Forgan have seen a short position in European stocks hinder their short-term performance.
Mr McQuaker said that the short position in Dow Jones Eurostoxx 50 futures – a holding which benefits if markets fall – was a drag on the performance of the £662.7m fund in recent months.
The FTSEurofirst 300 index rose almost 5 per cent in June and then rose a further 4.2 per cent up in July to 1,064.8 points – a level not seen since April.
At the end of June, European leaders gathered in Brussels for a summit in which an agreement was struck to restructure Spain’s ¤100bn (£80.7bn) bank recapitalisation plan.
The new plans will see EU bailout funds being injected directly into the country’s banks.
Germany indicated it was prepared to intervene to shore up Italian and Spanish borrowing costs, saying eurozone leaders should use existing powers with their ¤440bn rescue fund for short-term help.
“The month ended with an unexpectedly successful European summit leading the market to finish the first half of 2012 with one of the strongest days of the year,” Mr McQuaker said.
“As sentiment improved, so the demand for safe haven assets waned in June and government bond yields rose from the unprecedented lows seen at the end of May and early June.”
Elsewhere, the managers have reduced major fixed income holdings. The duo recently reduced the size of their holdings in the £584.6m Axa US Short Duration High Yield fund, Pictet’s $9.3bn (£5.9bn) Emerging Local Currency Debt fund and Richard Woolnough’s £6.2bn M&G Corporate Bond fund.
The reduction of Mr Woolnough’s fund came several weeks before a formal announcement by M&G that it was to limit inflows into its giant Corporate Bond fund and the £5bn Strategic Corporate Bond fund.
With part of the proceeds, the managers reintroduced gold by purchasing a physical gold exchange traded fund (ETF) – one of four holdings classified as an alternative by the managers.