The managers of Henderson Diversified Income (HDIV) are increasingly cautious on markets. Co-manager, John Pattullo, went as far as to quote the famous “Winter is coming” line from ‘Game of Thrones’ in his latest blogpost. Not only are HDIV’s managers convinced that the upward phase of this economic cycle is drawing to a close but also that inflation, which has been on a rising trend in recent times, is nearing its peak. They say that we remain in an environment of low to no growth, low inflation/deflation and low interest rates by historical standards. This stance is reflected in the positioning of HDIV’s portfolio and has fed through into the fund’s recent performance.
High income from a flexible fixed income portfolio
HDIV’s objective is to seek income and capital growth such that, on a rolling annual basis, the total return on the NAV (including the reinvestment of dividends) exceeds three-month sterling LIBOR plus 2%. It invests in a diversified portfolio of global assets including secured loans, government bonds, high yield (sub investment grade) corporate bonds, unrated corporate bonds, investment grade corporate bonds and asset backed securities. The trust may also invest in high yielding equities and derivatives. The managers use gearing to enhance returns. Dividends, which comprise the bulk of returns for investors, are paid quarterly.
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