Henderson International Income Trust plc

Henderson International Income Trust invests globally outside the UK and its main objective is to generate increasing income for shareholders, as well as being a diversifier to UK portfolios.

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Ben Lofthouse explains Henderson International Income Trust
What does it do?

The Trust aims to provide shareholders with a rising level of income from dividend, as well as grow the value of your investment (capital) in the medium to long-term, from a geographically diversified portfolio that excludes the UK market.

How does it do it?

Leveraging Janus Henderson’s income expertise in different geographical regions, the Trust invests in three key international markets – North and South America, Europe and the emerging Asia-Pacific region. The Trust has a flexible mandate, allowing it to invest across the spectrum of smaller and larger companies, but tends to buy shares in companies that offer a dividend payment of more than 2% of the share price.

Why does Ben do it?

I look for companies that have got the basics right (like a healthy balance sheet and income statement); operate in markets that are difficult to enter; and have good cash flows. What we try to avoid is overpaying for dividends.

The Trust is designed to be a diversifier for investors who hold shares in UK companies, particularly those that look for dividend income, so we will not hold any UK companies or any dual-listed stocks that are listed in the UK as well.

I manage the fund and I decide on the geographical allocations, but I am helped by other managers who have geographical expertise in different regions and we work together to find the best selection of companies. In effect, we are generating a ‘global income best ideas portfolio’.

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.

Global portfolios may include some exposure to Emerging Markets, which tend to be less stable than more established markets and can be affected by local political and economic conditions, reliability of trading systems, buying and selling practices and financial reporting standards.

Where the Trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise

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.

If the Trust seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.

Higher yielding bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets

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.

The portfolio allows the manager to use options for revenue enhancement purposes. Options can be volatile and may result in a capital loss