(Alliance News) - Henderson Diversified Income Trust PLC on Thursday said its net asset value per share held relatively steady in its most recent year despite tough market conditions.
The company's NAV per share as at April 30, the end of its financial year, was 86.82 pence, a 0.7% decline from 87.44 pence the year before.
Fund Managers John Pattullo and Jenna Barnard said: "The movement in the net asset value over the year under review reflected the inherent risk and sensitivities of the portfolio. For most of 2018 the average price of the assets in the portfolio drifted lower as both US government bond yields and credit spreads moved higher in tandem (lower in price). By December however, risk assets were in a tailspin and government bond prices moved substantially higher as bond yields tumbled. This combination of factors was a classic indication of risk. Our net asset value per ordinary share was relatively resilient."
The company reduced its dividend by 3.3% to 4.40 pence per share from 4.55 pence per share.
There was a sense of trouble ahead for markets, and company Chair Angus Macpherson said the trust is moving to more secure investments with lower returns.
"The portfolio is being positioned by the managers to capture what they describe as 'sensible income'. This involves the exclusion of illiquid, small capitalisation issuers, those with low returns on capital or cash flow and the avoidance of heavily cyclical industries and those sectors facing structural or disruptive challenge. Reflecting this, the majority of the portfolio is invested in US assets with very little exposure to continental Europe," said Macpherson.
"In such markets there is limited potential for significant asset appreciation and a balance found between finding yield which has acceptable risk. Should asset appreciation occur, it will make it even harder to find assets to invest in which provide good yield with reasonable risk. While it increasingly appears the Managers have been proved correct in their view of the market, it is a market that does not offer easy opportunities for income investors," he added.
Shares in Henderson Diversified Income closed up 1.8% at 93.00 pence on Thursday.