Trust Awards 2014: Premier Group

Winner: Henderson Global Investors

The phalanx of UK and European trusts managed by Henderson Global Investors were responsible for its triumph in our Premier Group award category. Both sectors were relatively strong over the past three years, and HGI has five well-managed trusts in the former sector and three in the latter.

The balance of the 12 trusts that counted towards HGI's award-winning average include two global trusts, an Asia Pacific trust and Henderson Diversified Income, which is in the global high income sector.

The strongest of the four was Bankers Investment Trust and the weakest was Henderson Global Trust. It is expected to benefit from the February recruitment of a new manager who will deploy more gearing and increase its overseas coverage.

Henderson Far East Income was next weakest, partly because Asia ex Japan suffered a relapse in 2013, and partly because its performance has been below par.

It is therefore encouraging that Andrew Gillan has been headhunted to lead HGI's Asian equities team. Formerly at Aberdeen Asset Management, he remains based in Singapore, where Henderson has had an office since 1996.

James de Sausmarez, who has headed Henderson's investment trust business since 2005, is pleased with the two new appointments but proud that many of the trusts have had the same manager for a decade or more.

James Henderson, for instance, has managed Lowland since 1990 and Job Curtis has managed City of London Trust since 1991. Both managers are 20 years-plus veterans of HGI's Value & Income team, as is Alex Crooke, who has managed Bankers Trust since 2003.

Henderson Smaller Companies, the most rewarding of all HGI's trusts over the past three years, has been managed for 11 years by Neil Hermon. He is part of HGI's large pan European team, which is headed by John Bennett. He joined HGI as a result of its 2011 takeover of investment group Gartmore, and has achieved impressive three-year returns for Henderson European Focus.

Bennett's colleagues include Tim Stevenson, who has managed Henderson EuroTrust since 1992, and Olly Beckett, who first joined HGI in 1998 and has transformed TR European Growth Trust over the past three years.

The very varied investment styles within the pan-European team illustrate the freedom HGI grants its managers. De Sausmarez believes this is one reason the team is so stable. "It is an interesting place to work, with no global investment philosophy that everyone has to follow," he says.

Some HGI trust managers are value-oriented, others such as Hermon are growth addicts. Some like concentrated portfolios, but James Henderson, for example, may have more than 100 holdings in portfolios. De Sausmarez does not mind so long as they produce index-beating performances, as a good many of them have.

De Sausmarez believes the ability to gear has played an important role in generating good long-term returns for trusts. He is comfortable with the moderate long-term gearing of Bankers, City of London and Henderson Smaller Companies. Trusts such as Lowland have more variable levels. Henderson High Income, however, has substantial gearing.

He is a staunch defender of performance fees on more specialised trusts, but only when they have a lower base management fee than open-ended equivalents. "It helps to keep quality managers interested in running trusts and encourages young fund managers to want to join them," he argues.

However he has overseen the removal of performance fees on Bankers and City of London. He expects Bankers and City to prove comparatively defensive if there is a market setback, and suggests that the Henderson Diversified Income, Henderson International Income and Henderson Far East Income should also prove relatively resilient.

Highly commended group: Invesco Perpetual

Invesco Perpetual, our highly commended investment trust group, has benefited from having a UK smaller company trust, plus five trusts in the UK equity income and UK all companies sectors, all of which enjoyed buoyant trading conditions.

Apart from the smaller company trust, the three top performers over the three years to end March were all managed by Mark Barnett, who has succeeded Neil Woodford as head of UK equities.

Edinburgh Investment Trust, which used to be managed by Woodford, was the top performer in 2011/12 but not thereafter. Invesco Income Growth, which Ciaran Mallon has managed since 2005, did as well as EIT over the stretch.

Invesco Asia and Invesco Property Income were among the laggards, with the latter suffering from a gearing problem that dates back to 2008.