Thursday, 18 April 2013

Henderson Far East Income IT (HFEL)


This is one of three investment trusts in my income portfolio covering the quickly growing emerging markets of Asia - alongside Schroder Oriental Income and recently acquired Aberdeen Asian Income. It is managed by Michael Kerley who has many years experience in this area of the world.

HFEL has just issued its half year report for the 6 months to 28 February 2013. NAV is up 23.5% on a total return basis (including income). I am expecting dividends for the full year to be around 17p per share which will give a running yield of 4.7% based on the current share price of 360p.

The portfolio covers a huge region from China to Australia including Singapore, South Korea, Taiwan, Thailand and Indonesia. Unsurprisingly the ongoing charges of around 1.2% p.a. are a little higher than your average UK growth & income trust. Transaction costs amount to an additional 0.15%.

The outlook remains positive despite the tensions caused by the situation in North Korea

“We remain positive on the outlook for the region in the medium to long term but recognise that market direction will be dictated by global factors in the short term. The improving growth outlook in China and the tentative signs of recovery in the US should be positive for Asian economic and equity market growth. Valuations in Asia are attractive relative to their own history and other world markets and companies are cash rich with tremendous potential to increase dividends over time.”

More on this one after the full year report in early November.

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