Henderson Far East Income (LON:HFEL) is a relatively concentrated portfolio of 40-60 Asian equities, aiming to generate high income with the potential of long-term capital growth. Since February 2007, HFEL has been managed by Michael Kerley. Against a backdrop of the recent rebound in Asian stock markets, he suggests that the attraction of income from Asian equities has not diminished even though he believes investors have been focusing on growth rather than income. HFEL’s 5.7% dividend yield is the highest in its peer group. Having traded at a modest discount for part of 2016, HFEL has returned to trading at a premium.
Investment strategy: Focused on income
Manager Kerley seeks high income and capital growth from a diversified portfolio of Asian equities. The portfolio is split relatively equally between companies offering a current high dividend yield and companies with potential for high dividend growth. The manager and his team undertake in-depth fundamental research including detailed company modelling, with a focus on cash flow generation. There are no restrictions on either geographic or sector exposure – at end-March 2017, the largest country exposure was in China (c 21%), with the largest sector exposure in financials (c 33%). Gearing of up to 15% of gross assets is permitted, although at end-March 2017, HFEL was ungeared.
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