Henderson High Income Trust PLC Fund Data

After a strong start to the year, the FTSE All-Share Index sold off significantly in March. It fell 6.7%, as soaring energy prices heightened fears that inflation could rise and result in interest-rate hikes and a slowdown in economic growth. This monthly fall in the FTSE All-Share Index was the largest since the start of the Covid-19 pandemic in 2020. The oil price spiked (up 63%) as fighting in the Middle East escalated, with US and Israeli strikes on Iran prompting Tehran to launch attacks across the region. This effectively closed the vital Strait of Hormuz waterway, through which about a fifth of the world's oil and gas supply transits. The Bank of England (BoE), which kept its benchmark interest rate on hold, highlighted the threat of accelerating inflation due to higher energy prices and said a rate reduction was now unlikely. This caused the yield on 10-year UK government bonds (gilts) to rise sharply (prices fell) and it briefly hit 5.1% intra-day during the month, the highest level since 2008, before settling at 4.9% at the end of the month. The FTSE 100 Index fell 6.2% during the month, outperforming the mid-cap FTSE 250 Index which fell 10.5%. Given the rise in the oil price, energy was the best-performing sector. It was followed by typically more defensive sectors such as telecommunications and utilities. The real estate, consumer staples and consumer discretionary sectors underperformed. Given the significant fall in equity markets, the overweight position in equities relative to bonds versus the benchmark was negative for performance. Gearing (borrowing) also had a negative impact on performance. Although we own shares in Shell, we hold an underweight position relative to the large benchmark weighting. Therefore, the significant outperformance of its shares given the rise in oil prices was negative for relative performance. The equity holdings in Reckitt Benckiser, Taylor Wimpey and Genuit also detracted. Despite reporting good results, Reckitt Benckiser reduced its earnings expectations for this year given higher costs associated with the sale of its Essential Home division. Given the shift in expectations for interest rates and the impact this would have on increasing mortgage rates, shares in companies exposed to the housing market, like housebuilder Taylor Wimpey and building materials company Genuit, sold off. Taylor Wimpey also disappointed investors by cutting its dividend. Equity holdings in RELX, Tele2 and Bunzl were positive. Investors sought the relatively resilient historical earnings of RELX and telecommunications company Tele2's, while distributor Bunzl historically benefits during periods of higher inflation and hence its shares also outperformed. During the month we sold the holding in Mony Group (owner of MoneySuperMarket.com) based on fears over disruption from artificial intelligence (AI). While we think its short-term cash flows are unlikely to be impacted, we feel they could be over the medium term, which would likely impact the valuation the market ascribes to the company. We used the proceeds of this sale to increase the bond exposure, initiating holdings in bonds issued by water utilities firms Yorkshire Water and Anglian Water.

After a strong start to the year, the FTSE All-Share Index sold off significantly in March. It fell 6.7%, as soaring energy prices heightened fears that inflation could rise and result in interest-rate hikes and a slowdown in economic growth. This monthly fall in the FTSE All-Share Index was the largest since the start of the Covid-19 pandemic in 2020. The oil price spiked (up 63%) as fighting in the Middle East escalated, with US and Israeli strikes on Iran prompting Tehran to launch attacks across the region. This effectively closed the vital Strait of Hormuz waterway, through which about a fifth of the world's oil and gas supply transits. The Bank of England (BoE), which kept its benchmark interest rate on hold, highlighted the threat of accelerating inflation due to higher energy prices and said a rate reduction was now unlikely. This caused the yield on 10-year UK government bonds (gilts) to rise sharply (prices fell) and it briefly hit 5.1% intra-day during the month, the highest level since 2008, before settling at 4.9% at the end of the month. The FTSE 100 Index fell 6.2% during the month, outperforming the mid-cap FTSE 250 Index which fell 10.5%. Given the rise in the oil price, energy was the best-performing sector. It was followed by typically more defensive sectors such as telecommunications and utilities. The real estate, consumer staples and consumer discretionary sectors underperformed. Given the significant fall in equity markets, the overweight position in equities relative to bonds versus the benchmark was negative for performance. Gearing (borrowing) also had a negative impact on performance. Although we own shares in Shell, we hold an underweight position relative to the large benchmark weighting. Therefore, the significant outperformance of its shares given the rise in oil prices was negative for relative performance. The equity holdings in Reckitt Benckiser, Taylor Wimpey and Genuit also detracted. Despite reporting good results, Reckitt Benckiser reduced its earnings expectations for this year given higher costs associated with the sale of its Essential Home division. Given the shift in expectations for interest rates and the impact this would have on increasing mortgage rates, shares in companies exposed to the housing market, like housebuilder Taylor Wimpey and building materials company Genuit, sold off. Taylor Wimpey also disappointed investors by cutting its dividend. Equity holdings in RELX, Tele2 and Bunzl were positive. Investors sought the relatively resilient historical earnings of RELX and telecommunications company Tele2's, while distributor Bunzl historically benefits during periods of higher inflation and hence its shares also outperformed. During the month we sold the holding in Mony Group (owner of MoneySuperMarket.com) based on fears over disruption from artificial intelligence (AI). While we think its short-term cash flows are unlikely to be impacted, we feel they could be over the medium term, which would likely impact the valuation the market ascribes to the company. We used the proceeds of this sale to increase the bond exposure, initiating holdings in bonds issued by water utilities firms Yorkshire Water and Anglian Water.