Investors must review funds after Henderson shake-up
Experts are urging investors with Henderson holdings to re-assess their portfolios after the firm announced sweeping changes to its fund range.
Henderson Global Investors has proposed a number of changes to its UK retail fund range following further integration with New Star funds.
Since the acquisition of New Star in April 2009, Henderson has made a number of changes to its fund range, including the launch of a European Special Situations Fund and a change in the investment style or name to a couple of its other products.
Now the firm, which has £58.1 billion assets under management, is attempting to address any remaining overlaps by merging five funds and changing six fund names.
The proposed changes will affect the UK and global equity, multi-manager and fixed-income ranges.
In the UK equity range, the Henderson Growth & Income Fund will merge into the Henderson Higher Income Fund and will continue to be managed by its current team, Graham Kitchen and Andy Jones.
The UK Growth Fund will merge into the UK Alpha Fund and will be managed by Stephen Peak, and the UK Extra Income Fund will be merged into the Managed Distribution Fund, which will continue to be managed by John Pattullo, Jenna Barnard and Trevor Green.
Simon Hillenbrand, director of UK retail at Henderson, says: "The proposed changes to the retail fund range, whether it be a fund merger, a change of investment objective/policy or the appointment of a new manager, will make it easier for investors and advisers to access the investment talent of our fund managers."
In terms of global equity products, the Global Equity Fund will change its objective and policy and be renamed the Global Dividend Income Fund. In place of Nick Sheridan, Ben Lofthouse and Job Curtis will manage the fund.
The changes will be voted on by unitholders and shareholders at the beginning of May and are subject to 75% approval.
Ben Yearsley, investment manager at Hargreaves Lansdown, thinks it’s a necessary move following the New Star takeover, in order to rationalise the fund base. He says investors should see it as a good opportunity to re-assess their portfolio: "If you’re in a fund you were happy with and now it has a new manager or a new remit, make sure you are still happy with it."
A raft of changes has also been proposed in the multi-manager range. These include name changes for the Balanced Portfolio, Tactical Portfolio and Managed Portfolio, which will be called the Multi-Manager Balanced Fund, Multi-Manager Tactical Fund and the Multi-Manager Managed Fund respectively.
It also includes the merging of the Cautious Portfolio Unit Trust into the Multi-Manager Income & Growth Fund under the management of Bill McQuaker.
The Henderson Multi-Manager Growth Fund will merge into the Active Portfolio and become the Multi-Manager Active Fund, managed by Mark Harris and Craig Heron.
Finally, in the fixed income range, the Extra High Yield Bond Unit Trust will be renamed the Extra Monthly Income Bond Fund, and will continue to be managed by James Gledhill and Ben Pakenham.
The Fixed-Interest Unit Trust will be renamed the Fixed Interest Monthly Income Fund and be run by James Gledhill and Ben Pakenham, while the High Yield Bond Fund will be named the
High Yield Monthly Income Fund and managed by James Gledhill and Ben Pakenham.
All of the bond funds will be given the powers to go long or short, along with the Sterling Bond Unit Trust under Stephen Thariyan and Philip Payne.
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
A collective investment vehicle (known in the US as a “mutual” or “pooled” fund) and similar to an Oeic and investment trust in that it manages financial securities on behalf of small investors who, by investing, pool their resources giving combined benefits of diversification and economies of scale. Investors buy “units” in the fund that have a proportional exposure to all the assets in the fund, and are bought and sold from the fund manager. The price of units is determined by the value of the assets in the fund and will rise or fall in line with the value of those assets. Like Oeics (but unlike investment trusts) unit trusts and are “open ended” funds, meaning that the size of each fund can vary according to supply and demand of the units form investors. Unit trusts have two prices; the higher “offer” price you pay to invest and the “bid” price, which is the lower price you receive when you sell. The difference between the two prices is commonly known as the bid/offer spread.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.