Analysts Downgrade 4 Henderson Europe Funds

Following the departure of three fund managers from the Henderson European equities team, Morningstar analysts have downgraded four funds

Emma Wall 12 December, 2017 | 12:35AM
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Emma Wall: Hello, and welcome to the Morningstar series, "Ask the Expert." I'm Emma Wall and I'm joined today by Morningstar's Pete Brunt to talk about the recent changes in the Henderson European Equities team.

Hi, Pete.

Peter Brunt: Hi, Emma.

Wall: So, what is happening at Henderson, because there are quite a few changes going on within the European equities team at the moment, aren't there?

Brunt: Yeah. Well, there have been some changes on the European Equities team. Asim Rahman, Bill Casey and Nick Kissack have all stepped back. They are on gardening leave. They will be gone officially on January 2018.

Wall: And what funds does this impact? Because between them they did co-managed or managed quite a few strategies, didn't they?

Brunt: OK. So, we rate a number of funds on Henderson's European equity desk. The funds that this directly impacts are those run by John Bennett. So, that is the Henderson European Focus Fund; the Henderson European Focus Trust (HEFT), the investment trust for the same strategy; the Henderson European Selected Opportunities Fund; and the Henderson Gartmore Continental European Fund. So, those four funds are the ones we are looking at.

And why does it affect those? Well, Asim Rahman was a named co-manager on these three open-ended vehicles and he had also worked with John Bennett since 2003. So, a pretty integral input on those strategies. And Bill Casey and Nick Kissack were both analysts of good experience on that team and they were also contributing ideas towards John Bennett's overall strategy. So, them leaving does have a material impact on the funds.

Now, what's our view? Well, those funds were all rated Silver. And we debated the overall impact and we've decided to lower the rating to Bronze. Why Bronze and not Neutral? Well, because John Bennett has been running money for a very long time. And whilst he has had a couple of challenging years, we have every confidence that he is going to be able to turn it around. Just we have a little bit of doubt that he has got to bring in more resources to do so and that takes time in itself, and just brings an element of uncertainty. He also has other experienced people around him on the European Equities team. There are still analysts left. However, they are not going to be dedicated to his strategy.

So, big picture is, we still think that the funds, the four of them, have the ability to outperform over the long term but our conviction levels are a little bit lower.

Wall: It's also worth noting that these aren't the only European equity funds or indeed, equity funds that Morningstar analysts rate at Henderson. These are just the ones that you feel are affected by these departures?

Brunt: Yeah. So, Tim Stevenson also manages a couple of funds that we rate. He sits on that team. He has his own dedicated analysts and James Ross. So, we feel that this will impact John Bennett's funds more than it will impact Tim Stevenson's funds and therefore, the ratings on those funds have not changed.

Wall: Pete, thank you very much.

Brunt: You're welcome.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Henderson European Focus Trust Ord142.50 GBP0.18Rating
Janus Henderson European Focus I Acc290.73 GBP-0.94Rating
Janus Henderson European Sel Opps I Acc2,313.24 GBP-1.02Rating
Janus HndrsnContinen Eurp H2 EUR18.02 EUR-1.33Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar