The team behind Henderson’s global equity income fund has been pushed onto the back foot after the world’s economic recovery stuttered last year.
The unit includes co-managers Andrew Jones and Ben Lofthouse, who run the £703.1m Henderson Global Equity Income fund, which has performed strongly since it changed its remit from investing just in the UK to including the rest of the world in May 2012.
But last year the fund’s 6.3 per cent return lagged behind the 6.7 per cent average return of funds in the Investment Association’s Global Equity Income sector.
“We had a bit of a tougher year and we fell to mid table. Economic recovery didn’t come through as quickly as we had hoped,” Mr Jones said.
“However, we are still relatively optimistic about economic growth and we have not really changed the portfolio a great deal.”
The former New Star fund was taken over by Henderson when it bought New Star in 2009. Henderson then revamped the fund in 2012 after a sustained period of underperformance.
The changes centred on broadening the fund’s remit to include the rest of the world and moving it into a global equity income fund peer group.
At the end of November 2014, the fund had just 20 per cent invested in the UK, while its highest geographical allocations were to the US at 32 per cent and the eurozone at 24 per cent.
But the managers may have to wait some time before the global recovery returns to full speed, as both the International Monetary Fund (IMF) and the World Bank last month cut their forecasts for global growth.
The IMF now expects global growth of 3.5 per cent this year, compared to its previous estimate of 3.8 per cent made in October 2014.
However, there is one major factor that could spur global growth: the sharply declining oil price, which has been viewed as a tax cut for many consumers.
The oil price has dropped dramatically, trading at around $50 a barrel.
But the IMF has predicted this price drop will be countered by negative factors. Christine Lagarde, the managing director of the IMF, described the global growth outlook as “too low, too brittle and too lopsided”.
However, the Henderson managers said they were sticking to their guns, insisting that a return to growth was on the way.
Mr Lofthouse said: “If you ignore the behavioural aspects, the pure fact of the matter is economic growth is still okay and supply is coming on in some industries.”
But he added that “one of the confusing things is the very low 10-year government bond yields, which shows a significant part of the market thinks the economic recovery is a long way off”.
Swiss 10-year bonds recently plummeted to negative territory and short-term government bond yields across the globe have fallen to negative yields, as investors appear increasingly gloomy about economic prospects.