The Board of the Henderson Value Trust has proposed to double its dividend for 2014 compared to the previous year, as the company reaches the half-way point in the restructuring of its investment portfolio.
Henderson took over the management of the investment trust 18 months ago and has been moving the portfolio away from deep value investing to focus on “good quality specialist and alternative asset funds”.
In the annual report the managers, Ian Barrass and James de Bunsen, who took over from Paul Craig earlier this year, explained that in 2013 a number of its new investment selections were expected to increase the level of cash yield from the portfolio to help the trust develop a more progressive dividend policy.
They added: “During the financial year ended 30 September 2014 we continued to seek new investments with attractive income characteristics. As a result, the Board has been able to announce a dividend of 3p per share compared with last year’s 1.5p, an increase of 100 per cent. Although the company will continue to seek most of its total return from capital growth, we do believe shareholders have welcomed our successful initiative to increase the cash component of the company’s total return.”
In their update on the portfolio they also noted investment activity this year had been centred around “certain specialist sectors which we believe offered compelling risk-adjusted returns”.
They added: “These included the credit sector where we invested in funds focused on secured loans, distressed debt and property lending. There were also attractive opportunities in the renewable energy sector. In addition, we invested in one high quality long/short European equity hedge fund in order to start rebuilding the company’s hedge fund sleeve.”
Meanwhile the annual report noted the trust had delivered a share price total return of 3 per cent in the financial year to September 30, and a net asset value (NAV) total return of 1.6 per cent, while the market capitalisation of the trust had increased to £119.8m.
Richard Gubbins, chairman of the trust’s board, commented: “Although modest, these were achieved during a period of major transition as Henderson reached the half-way point in its three-year restructuring plan for the company’s investment portfolio. We expect performance to improve steadily to acceptable and sustainable levels as the restructuring reaches completion and the new portfolio matures.”
As a result the Board has unanimously recommended that shareholders vote in favour of the continuation of the company for a further three years in its annual general meeting next month.