What we aim to deliver
Our objective is to achieve long term capital growth in real terms and steadily increasing income. The aim is to achieve a higher rate of total return than the FTSE Actuaries All Share Index through investing in a diversified portfolio of stocks.
We have grown or maintained for each of the last 40 years consecutively.
The portfolio is managed by James Henderson of Janus Henderson Investors.
How James Henderson Invests
We take a bottom up approach, spending a great deal of time with the management teams of our portfolio companies and conducting detailed analysis of the strengths, weaknesses and long term growth prospects of those companies into which we invest your money. We continue to identify organisations which are not trading at fair value or with respect of the long term prospects for the business.
It also allows us to invest in businesses which have great long term qualities but for various reasons may have hit a bump in the road. We will buy stocks that are slightly unfashionable but that we believe have a significant potential for growth. They will typically be world class brands selling globally, that have fallen out of favour.
We are patient with our positions and invest for the long term. We build up positions gradually - having taken the decision to invest in a stock we would typically begin by investing around 30bps, which we add to over time dependent upon the risk profile of an individual stock. Our long list of stocks allows us to moderate our position size where we perceive the investment case is higher risk than may be the case elsewhere in the portfolio. This means that we take a risk based approach to our position sizing, while ensuring that if we get something right the sizing is sufficient to move the dial on the portfolio performance as a whole.
The portfolio is typically diversified across approximately 140 stocks, around 75% of which UK focused (typically 66% FTSE, 33% small and mid-cap) with the remaining 25% distributed across North America, Europe, Asia and rest of world where opportunities arise to build positions in organisations with an attractive profile. We hold no sector allocation constraints facilitating rotation into sectors which offer best long term value.
The portfolio turnover is low. Our patient approach, allowing for the realisation of fair value, has enabled us to outperform our benchmark significantly.
Where stated below, the investment manager must obtain prior approval to exceed permitted limits. This will either be by Board Approval (and evidenced by Board Resolution) or Executive Approval, which shall derive from the Chairman or Chief Executive.
Portfolio Size and Concentration
The portfolio should consist of no more than 150 stocks. The value of the largest 20 holdings (excluding holdings in collective investment vehicles held to give exposure to the Japanese, Asia/Pacific or emerging market regions) shall not exceed 40% of the portfolio.
Individual Stock Limits
New acquisitions shall not constitute more than 5% of the portfolio. Additions to existing stocks shall not cause each total holding to exceed this 5% limit. If an individual holding increases in value to the extent that it becomes more than 5% of the portfolio (including cash), Executive Approval shall be sought before determining whether sufficient sales are transacted to ensure that the stock remains at or below the 5% level (that approval to be reported to the next board meeting).
Geographical allocation as agreed by the board from time to time and notified to the investment manager.
Current guidelines are:
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For purposes of calculating limits, cash shall be excluded.
Stock Type Limits
- No investment other than equity shares quoted on a major international Stock Exchange (including AIM for the avoidance of doubt) may be made without prior Executive Approval
- No investment in any investment vehicle managed or advised by Janus Henderson shall be made without prior Board Approval.
- No investment in unlimited liability companies.
Currency hedging may be undertaken with Board Approval and executed by the Corporation's finance department.
All borrowing shall be subject to Board Approval, and this will be arranged by the Corporation's finance department.
Stocklending is permitted up to a limit of 30% of the NAV.
Permitted capital at risk up to 5% of the value of the portfolio.
Daily Dealing Limit
Net purchases in any dealing day are to be limited to £15.0 million unless prior Executive Approval is obtained.
- No new investment in suspended shares
- No short positions
- No more than 15% of gross assets to be invested in other UK listed investment trusts
Corporation to maintain eligibility for investment trust status
Note that the directors may make adjustments to the strategy from time to time, but any significant amendments would require advance shareholder approval.