Why is Henderson Diversified cutting its dividend and fees?


#1

Originally published at: https://whichinvestmenttrust.com/why-is-henderson-diversified-cutting-its-dividend-and-fees/

The trust is reducing its dividend in order to avoid chasing riskier investments as enduring low interest rates continues to impact the income available on Bonds and bonds like products. Henderson Diversified Income Trust 5yr returns. Henderson Diversified Income Trust (L0N:HDIV) is reducing its dividend by around 12% from the next quarterly payment due in…


#3

I think getting rid of the performance fee is a good move. It was way too easy to achieve and in a Bond type fund where ordinarily the returns to shareholders are lower than with equity funds it is pretty inexcusable in my view.

I’ve avoided this fund up until now for this very reason, and disagreed with Whichinvestmenttrust.com over their recommending this, as the editor will know from my emails to him. Now it’s gone I agree this is pretty much one of the best Bond funds, with one of the best mnaagement teams in the sector.

They do need to grow this substantially though, it would be a lot cheaper if it were a couple of billion pounds in size and there’s no bloody reason why it can’t be in my opinion, at least now that the performance fee has gone.


#4

HDIV has already moved into riskier areas over the years. The September factsheet shows around 60% in high-yield bonds and 10% in secured loans - a position that is almost the complete reverse of the earliest years. Then again, Morningstar is showing that 90% of the holdings have investment-grade ratings, although they’re saying that the average rating is BBB. Are Henderson/Janus able to clarify?

One of my bugbears with some bond/debt fund factsheets etc. is that they often fail to include data such as credit rating breakdown and duration, and these can be useful when looking to hold less correlated funds - and including them might help to understand third-party data.

HDIV is still a core holding for me, though. Given that interest rates have remained low and coupons on new issues had fallen, the reduction in the dividend isn’t really a surprise. It will be interesting to see how other ITs in this area fare.