Henderson Value trust's managers have pledged to avoid 'face-saving' sales and concentrate on realising the longer-term potential of stocks to turn the fortunes of the fund around.
The company’s board appointed Henderson's Ian Barrass and Paul Craig to run the portfolio in March 2013, taking over from SVM which had managed the trust for two decades.
The managers are aiming to boost the fund’s performance through building up a core portfolio of high quality holdings, as well as exploring lesser known markets.
The trust’s chairman Shane Ross stressed the managers need time to perform: “While the company is still underperforming its peers, we have discouraged the new managers from feeling pressurised into making short-term decisions in pursuit of ephemeral performance gains.
"We recognise that a significant number of the underperforming stocks which remain from the previous portfolio are illiquid or unquoted. We do not wish to encourage face-saving sales ahead of the continuation vote, but to ensure that any latent value in these holdings is realised to the benefit of shareholders.”
In their statement, the managers outlined a measured approach to portfolio change: “What this means in practice is taking care in both the selection and timing of disposals, retaining good quality holdings in the inherited portfolio, and ensuring that new investments are of sufficient quality and value to provide attractive returns over a reasonable timeframe.”
As a result, the benefits of the change may not emerge in full until after 2014, they said.
The Henderson Value trust fell 11.6% over the three years to 10 January 2014, compared to a Global Growth average of 23.9%, according to FE.
In the year to 30 September 2013, the company’s net asset value per ordinary share increased by only 4.3%, compared to a 19% increase in the FTSE World index benchmark.
The managers said one reason for its underperformance last year was a relatively low allocation to outperforming markets including the US, Japan, and Europe, and greater exposure to markets such as Russia and Eastern Europe, which struggled in 2013. Positions in resources and commodities also hurt returns over the course of the year.
As of November 2013, just over a quarter of the fund was invested in European equities, 18.7% was in international equities and 15.3% in North American equities.
In September, the board introduced additional investment guidelines designed to support appropriate portfolio diversification. The gearing limit remains at 20% of net assets.
Under the tenure of SVM Asset Management, the trust was known as the SVM Global fund.