The Henderson Far East Income Trust aims to generate a high level of income for shareholders by investing in companies across the Asia-Pacific region.

What does it do?

Henderson Far East Income aims to provide a high level of dividend as well as growing an investors capital from a diversified portfolio of investments traded on the Pacific, Australasian, Japanese and Indian stock markets.

How does it do it?

The Company was founded in 1930 and has been managed by Mike Kerley since 2007. It invests in companies across Asia and Mike looks for companies that have high and sustainable dividends now, and those which have the potential to grow their dividends in the future.

Mike focuses on finding companies that have an attractive share price, but also those that have a significant and sustainable cash flow as it is cash that allows dividends to be paid.

There two parts to the portfolio – high yield, and dividend growth. The first is about dividends today, the second about dividends tomorrow and Mike and his team believe that a growing dividend at a company drives a growing share price in the future.

Why does Michael do it?

Asia has always been an exciting and interesting market for me and it’s been fascinating watching the region develop over the years. Today some of the biggest brands in the UK and Europe, think Samsung, are Asian and it’s my view that more and more will be in the future. What’s exciting is seeing change across the region and in these companies driving value for shareholders.

I enjoy the challenge of finding the companies that meet our need for income, analysing them and their prospects, and then making an investment in this market. Although I’m based in the UK we have a team on the ground in Asia and I regularly visit the region and the companies we invest in.

What are the Risks?

Share prices go up and down. If you sell your shares at a lower price than you bought them, you will have lost money. You should be comfortable with this risk before investing. See Step 2 for more information on risk, if you haven’t already.

Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.

This Trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this Trust.

The return on your investment is directly related to the prevailing market price of the Trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Trust. As a result losses (or gains) may be higher or lower than those of the Trust’s assets.

Where the Trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.

The Trust may borrow money (gearing) as part of its investment strategy. If the Trust utilises its ability to gear, the profits and losses incured by the Trust can be greater than those of a Trust that does not use gearing.

All or part of the Trust's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.

The portfolio allows the manager to use options for revenue enhancement purposes. Options can be volatile and may result in a capital loss.

Source: Morningstar