In this latest episode of Trust TV, we speak to Tom O’Hara, Portfolio Manager of Henderson European Focus Trust – to discuss how he is steering the Trust through a challenging market environment, areas where he is finding opportunities, and the risk of a recession and its impact of global markets. Tom also looks at how the war in Ukraine has affected the ESG narrative.

Key takeaways:

• We have circa 18% exposure to the energy sector, and we have been refining our exposure within the consumer mass market space as the cost-of-living crisis intensifies. We are style agnostic – so we have been investing in a blend of growth and value stocks.
• Due to higher input costs (raw materials, wages, and energy) and lower consumer spending, businesses within the European industrials and consumer discretionary sectors have been experiencing higher margin pressure.
• ESG is partially responsible for the distortion in the capital allocation process both within equity markets and corporations. It’s not our job to cancel businesses – we prefer to work with companies to ensure that they are travelling in the right direction whilst aligning shareholder and societal interests.

Glossary Expand

Growth investing – Growth investors search for companies they believe have strong growth potential. Their earnings are expected to grow at an above-average rate compared to the rest of the market, and therefore there is an expectation that their share prices will increase in value.

Value investing – Value investors search for companies that they believe are undervalued by the market, and therefore expect their share price to increase. One of the favoured techniques is to buy companies with low price to earnings (P/E) ratios.