Henderson High Income Trust plc

The Henderson High Income Trust invests in UK equities and bonds with the aim of generating attractive and reliable dividend payments for shareholders.

What does it do?

The trust dates back to 1989, but took its current shape after the merger between Henderson Highland Trust and TR Income Trust in 1993. The trust’s main objective is to provide a high level of dividend income for shareholders, with one eye on long term capital growth.

How does it do it?

Focused on the UK market, the trust predominantly invests in both well-known and smaller companies. Bonds typically account for about 20% of the portfolio, but the mix between bonds and equities can change depending on their attractiveness through the economic cycle.

Why does David do it?

My style is very much about picking good quality companies with good management teams at the right price, which may have been overlooked by the market. A key part for us is finding companies with healthy balance sheets now, but who can also create a flow of cash into the company in the future. It’s an income trust, so we need the companies we invest in to pay the dividend.

The focus is on making sure those companies are prudently financed. It’s not just about the dividend they can pay now but that they can sustain those payments over the longer term and grow those payments as well.

I think the trust would be attractive for those investors looking for a steady income. In the current environment of low interest rates, cash deposits aren’t providing the same return that they used to.

What are the Risks?

Share prices go up and down. If you sell your shares at a lower price than you bought them, you will have lost money. You should be comfortable with this risk before investing. See Step 2 for more information on risk, if you haven’t already.

Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.

This trust is suitable to be used as one component in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this trust.

The return on your investment is directly related to the prevailing market price of the trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the trust. As a result, losses (or gains) may be higher or lower than those of the trust’s assets.

The trust may borrow money (gearing) as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incurred by the trust can be greater than those of a trust that does not use gearing.

All or part of the trust's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.