Key takeaways:
- The change in interest rates has offered the chance to take advantage of a tactical position in banks, which historically benefit from raised rates. However, we do not see long-term intrinsic value in the sector.
- We believe that the energy sector could become more prevalent in global investment portfolios as investors wake up to the structural importance of oil.
- It is important for active investors to hold management teams’ feet to the fire on ESG metrics and to focus on the rate of improvement.
Environmental, social and governance (ESG) metrics are factors beyond traditional financial analysis. This may limit available investments and cause performance and exposures to differ from, and potentially be more concentrated in certain areas than the broader market.
Alpha is a measure that can help determine whether an actively-managed portfolio has added value in relation to risk taken relative to a benchmark index. A positive alpha indicates that a manager has added value. Alpha is the difference between a portfolio’s return and its benchmark’s return after adjusting for the level of risk taken.
Sustainalytics, MSCI and S&P provide ESG and corporate governance research and rating for listed companies.
MSCI World Index℠ reflects the equity market performance of global developed markets.
MSCI Europe Index℠ reflects the equity market performance of developed markets in Europe.The Henderson Smaller Companies Investment Trust
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
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