The £1bn trust from Janus Henderson returned 0.23% on a share price basis during the year ending 31 October 2018, significantly lagging behind peers in the IT Global sector who returned 4.21%. The FTSE World Index was up 1.86% by contrast.
The trust was trading at a discount of 3.6% compared with a discount of 3.1% in 2017.
Janus Henderson head of global equity income Alex Crooke (pictured), who runs the trust, said the past year “has been one of the most challenging in my career” as political uncertainty and “fear of the unknown swamped equity markets”.
As lead manager, Crooke handles the UK portion of the portfolio and makes asset allocation calls across the trust. He is assisted by a team of other Janus Henderson managers who select investments for the trust’s Europe, North America, Asia and emerging markets exposure.
Sue Inglis takes over
The trust’s annual results come as Sue Inglis, who has enjoyed a prolific career as a non-executive, steps up to become chairman. She is currently a non-executive director for a trio of high-profile trusts, including The European Investment Trust and the Baillie Gifford US Growth Trust. She was managing director at Cantor Fitzgerald Europe until June 2018.
Inglis will replace existing chairman Richard Killingbeck at the forthcoming AGM in February. Killingbeck made a splash with his quick exit from WH Ireland after the DFM revealed an operating loss of £1.6m under his watch as CEO.
Rathbones CIO Julian Chillingworth will succeed Inglis as senior independent director.
In his farewell outlook for the trust Killingbeck said it was too early to turn bullish despite the fact it has become “very tempting” to begin viewing markets in a more contrarian light. “I fear caution remains the key watch word for global equity markets, at least for the first half of 2019,” he stressed. “The direction of US interest rates, the outcome of Brexit with its range of economic implications and the wider inflationary picture should all be clearer by this time. If corporate earnings growth remains positive then valuations may become compelling, despite the late stage in the cycle in which we find ourselves.”
Tim Stevenson steps back from European allocation
European manager Tim Stevenson, who is due to retire in early 2019, will be replaced on the investment trust by James Ross who has been with Janus Henderson since 2007. Despite a shaky year for performance, Crooke said the remaining line-up of managers working on the trust would not change.
US companies made up eight of the trust’s top-10 holdings as at 31 October 2018, including credit card providers American Express and Visa, as well as tech giants Microsoft and Apple. Warren Buffet’s Berkshire Hathaway was also listed as a top position.
“In hindsight asset allocation was a simple decision of owning American equities and the US dollar to the exclusion of all other global markets,” Crooke said. “Every other region declined with only Japan holding flat; Chinese equities fell over 20%, in a bear market. US investors clearly repatriated assets, with investment flows moving from international markets back into US dollars.”
Although the team upped its US equities position to 31.6% of the portfolio, this was half the weighting of the FTSE World Index (60.6%).