FE Alpha Manager Henderson has delivered stellar long-term returns over a career in asset management that spans back to 1990.
He says ignoring market noise and trying not to be too clever has enabled him to add value over the last two decades.
Performance of manager vs peer group since Jan 2000
Source: FE Analytics
"When I started my career, my boss told me one very important thing. He said: 'Just buy shares before you think their price will go up and the rest will fall into place.'"
"And that’s exactly what I did."
"It sounds very simple, but not all managers do this. I spend time looking at companies. I don’t listen to market noise – well I listen politely and then ignore everyone else’s macro views on the economy."
Henderson (pictured right) is very much a long-term investor and tends to have a low turnover across all of his portfolios. As a result, he has been more volatile than his peer group and is more susceptible to losses when the market falls, as seen in 2008. He specialises in income-generating portfolios that focus on UK companies. He says the domestic market is his speciality, although he does look to invest in the US in some of his portfolios.
Henderson says it is important for investors to stick to their strengths and not to try and succeed in unknown territory.
"One thing I have realised is that I am useless at investing in continental Europe," he continued.
"I used to look into Europe and buy shares that stayed cheap. So now I concentrate on the UK because operating profits tend to improve regularly, which you just don’t get on the continent."
Henderson’s only open-ended portfolio, the five crown-rated Henderson UK Equity Income fund, is the third-best performer in the IMA UK Equity Income sector over three years, with returns of 54.53 per cent.
Henderson has managed the £342.9m fund since the start of 2005.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
Henderson UK Equity Income is also a top-quartile performer over the last 12 months, but like the majority of Henderson's other portfolios, it has struggled over a five-year period due to his poor record in 2008.
Since its launch, the fund has returned 59.62 per cent, beating the sector by 6 percentage points. It is currently yielding 3.4 per cent.
Henderson also runs three other portfolios, which are all closed-ended: the Lowland Investment Company, Law Debenture Corporation and Henderson Opportunities Trust.
He has headed up Lowland since 1990. The trust, which has a dual focus of both growth and income, has registered top-quartile performance over one, three and 10 years in its IT UK Growth & Income sector.
The trust is currently yielding 2.32 per cent. Over 10 years it has returned 211.76 per cent, almost doubling the returns of its FTSE All Share benchmark.
It is trading on a 3.76 per cent discount and has a TER of 0.68 per cent.
Henderson has run the Law Debenture Corporation since 2003.
According to FE Analytics, the trust is a top-quartile performer in the IT Global Growth sector over one, three and 10 years. In the last decade, it has delivered 192.63 per cent, beating its All Share benchmark by 75.41 percentage points.
The trust has a global mandate and Henderson says he enjoys the flexibility he has to look outside the UK for investment opportunities.
"With the Law Debenture trust I get to look at a few US stocks," he explained. "This is good because North America is normally the place where investing trends start, well in fact most global trends."
FE data shows he currently has 7.7 per cent in North America, although the UK still dominates the core of the portfolio, making up 75 per cent of assets.
The Law Debenture Corporation is trading on a premium of 7.5 per cent and is currently yielding 3.36 per cent. It has a TER of 0.49 per cent.
Henderson Opportunities Trust is the only portfolio under the manager’s watch that focuses on capital growth alone.
Henderson says the trust is currently looking to take advantage of the small cap sector: "The Henderson UK Opportunities Trust has just 12 per cent in the FTSE 100 but has 35 per cent in the FTSE AIM."
"I really like this area of the market – it has a number of really good opportunities coming out of it and I think, as the whole, it is very under-researched by the industry."
The trust had a disastrous 2008, losing 60.17 per cent, which is predominantly why it is a bottom-quartile performer in its IT UK Growth sector since its launch in January 2007.
However, it appears the trust’s fortunes are starting to turn, and it is the best-performing vehicle in the IT UK Growth sector over the last year.
According to FE Analytics, the trust has returned 39.39 per cent year-to-date. This is double the return of the All Share.
It is available on a discount of 21.71 per cent and has a TER of 1.14 per cent.
Henderson says his bias towards industrials is a major theme throughout all of his portfolios.
"My belief about industrials in the UK is that they have some excellent products and they are gaining market share; but investors still think they carry too much baggage."
"They haven’t had a slow-down like other sectors over recent years and, while ratings are getting better, investors have ignored them. There are a huge variety of companies that have increased their dividend and made profit in the sector."