Fund of the week: Standing by small caps
Feb 17, 2012
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Henderson Opportunities Trust (LSE: HOT) fund manager James Henderson has had a tough year. In the 12 months to 1 February, the fund made a 22.1% loss, according to Trustnet.
But the fund has a great track record over three years – a return of 107.9% ranks it first in the UK Growth sector over this period. So despite a recent rough patch, Henderson is sticking to his guns; smaller industrial (37.4% of the portfolio) and technology (14.5%) firms are the best bets.
“We find the best value is in smaller companies. When you get firms [with turnover] below £100m, the price/earnings ratio is substantially lower than in any other types of market,” Henderson tells Fund Strategy magazine.
A heavy bias towards smaller firms – 9% of the fund is in FTSE 100 stocks, 25% in FTSE 250, 28% in smaller companies and the rest in Aim – meant the fund was hit by last year’s harsh economic conditions. As investors have moved “towards large, liquid trusts”, the fund is now cheap, trading at a discount to its net asset value of 28.3%.
That looks pretty steep. As FT Adviser notes, although smaller companies are risky, Henderson invests in a wide range of sectors and a third of the companies in the portfolio have net cash on their balance sheets.
So how is 2012 looking? Following December’s lows, things are starting to improve and Henderson predicts “quite a good year” ahead. “If the global economy grows, and even if there is dull headline growth in Britain, it would be good for the fund.”
Contact: 0800-856 5656.
Henderson Opportunities Trust top ten holdings
| Name of holding | % of assets |
|---|
| 2Senior |
3.9 |
| Hyder Consulting |
3.6 |
| SDL |
3.3 |
| IP Group |
3.3 |
| XP Power |
3.0 |
| Ricardo |
2.9 |
| Latchways |
2.9 |
| e2v technologies |
2.6 |
| Fidessa |
2.4 |
| Johnson Service |
2.3 |
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