Henderson Diversified Income Trust plc Fund Data

Global equity markets rose in May. Optimism that the US and Iran were close to ending their conflict also aided sentiment at times. Volatility flared up mid-month due to a lack of progress towards an agreement between the US and Iran, but hope emerged again later in May. As a result, oil prices fell, which helped ease pressure on inflation expectations, bond yields, and sectors exposed to higher fuel costs. Continued enthusiasm for artificial intelligence (AI) and resilient corporate earnings also helped boost investors' appetite for risk. Minutes of the US Federal Reserve (Fed)'s April meeting underpinned expectations that policymakers will keep interest rates higher for longer. US economic data was also largely upbeat, while consumer price rises quickened to a near three-year high, largely due to the energy shock from the Middle East conflict. As a result, markets priced in a greater probability that the Fed would raise interest rates this year. In the UK, Prime Minister Keir Starmer faced the threat of a leadership challenge after the Labour Party suffered heavy losses in May's local elections, which increased political uncertainty and unsettled investors. The telecommunications and technology sectors were the strongest performers by far, helped by some robust corporate results. Companies that are expected to benefit from the huge investment in AI, particularly chipmakers, also boosted AI-related stocks. Basic materials stocks followed as the prospect of peace in the Middle East boosted growth-style and more cyclical stocks. Energy stocks fared the worst amid falling oil prices. The utility sector was the next weakest as the improved risk sentiment meant that more defensive areas of the market fell out of favour. Asia Pacific ex Japan was once again the top-performing region in the index, driven by strong gains in the technology-heavy markets of South Korea and Taiwan. US equities marginally lagged the index, while emerging markets were weaker. All regions made a positive contribution to absolute performance, led by our Asia Pacific ex Japan and US holdings. Stock selection and regional allocation both made favourable contributions, driven by selections in US and European equities, which more than offset detraction from Asia Pacific ex Japan and Japan. The overweight position in Asia Pacific ex Japan added value, as did the lack of exposure to emerging markets. At the sector level, stock selection in financials made the biggest contribution, followed by basic materials. Holdings in the telecommunications sector detracted. The overweight position in technology was a key contributor. At the stock level, holdings in Micron Technology and SK Hynix, and an underweight position in Apple, were among the key contributors. Detractors included NextEra Energy, Disco Corporation and Netflix. Given the dynamic nature of events in the Middle East, volatility could remain elevated. As active investment managers with a broad opportunity set across global equities, we aim to navigate any weakness by taking advantage of what we see as attractive investment opportunities. We believe our investment focus on companies with strong historical profits and cash flows, as part of a diversified portfolio, can help provide some resilience during more volatile times. We feel that our internal expertise across equity regions and sectors, as well as our fundamental research process, gives us a good understanding of the risks and opportunities that global events can present. It is worth taking a step back when the headlines can seem daunting. We think current events reinforce some of our long-held themes, such as the need for greater electrification and deglobalisation. At the same time, some trends may remain inexorable, such as providing for ageing populations or the rise of AI. By investing for the long term, while seeking to understand (but not necessarily react to) short-term noise, we aim to deliver long-term capital growth for our investors and we also aim to grow the dividend over time.

Global equity markets rose in May. Optimism that the US and Iran were close to ending their conflict also aided sentiment at times. Volatility flared up mid-month due to a lack of progress towards an agreement between the US and Iran, but hope emerged again later in May. As a result, oil prices fell, which helped ease pressure on inflation expectations, bond yields, and sectors exposed to higher fuel costs. Continued enthusiasm for artificial intelligence (AI) and resilient corporate earnings also helped boost investors' appetite for risk. Minutes of the US Federal Reserve (Fed)'s April meeting underpinned expectations that policymakers will keep interest rates higher for longer. US economic data was also largely upbeat, while consumer price rises quickened to a near three-year high, largely due to the energy shock from the Middle East conflict. As a result, markets priced in a greater probability that the Fed would raise interest rates this year. In the UK, Prime Minister Keir Starmer faced the threat of a leadership challenge after the Labour Party suffered heavy losses in May's local elections, which increased political uncertainty and unsettled investors. The telecommunications and technology sectors were the strongest performers by far, helped by some robust corporate results. Companies that are expected to benefit from the huge investment in AI, particularly chipmakers, also boosted AI-related stocks. Basic materials stocks followed as the prospect of peace in the Middle East boosted growth-style and more cyclical stocks. Energy stocks fared the worst amid falling oil prices. The utility sector was the next weakest as the improved risk sentiment meant that more defensive areas of the market fell out of favour. Asia Pacific ex Japan was once again the top-performing region in the index, driven by strong gains in the technology-heavy markets of South Korea and Taiwan. US equities marginally lagged the index, while emerging markets were weaker. All regions made a positive contribution to absolute performance, led by our Asia Pacific ex Japan and US holdings. Stock selection and regional allocation both made favourable contributions, driven by selections in US and European equities, which more than offset detraction from Asia Pacific ex Japan and Japan. The overweight position in Asia Pacific ex Japan added value, as did the lack of exposure to emerging markets. At the sector level, stock selection in financials made the biggest contribution, followed by basic materials. Holdings in the telecommunications sector detracted. The overweight position in technology was a key contributor. At the stock level, holdings in Micron Technology and SK Hynix, and an underweight position in Apple, were among the key contributors. Detractors included NextEra Energy, Disco Corporation and Netflix. Given the dynamic nature of events in the Middle East, volatility could remain elevated. As active investment managers with a broad opportunity set across global equities, we aim to navigate any weakness by taking advantage of what we see as attractive investment opportunities. We believe our investment focus on companies with strong historical profits and cash flows, as part of a diversified portfolio, can help provide some resilience during more volatile times. We feel that our internal expertise across equity regions and sectors, as well as our fundamental research process, gives us a good understanding of the risks and opportunities that global events can present. It is worth taking a step back when the headlines can seem daunting. We think current events reinforce some of our long-held themes, such as the need for greater electrification and deglobalisation. At the same time, some trends may remain inexorable, such as providing for ageing populations or the rise of AI. By investing for the long term, while seeking to understand (but not necessarily react to) short-term noise, we aim to deliver long-term capital growth for our investors and we also aim to grow the dividend over time.