OREANDA-NEWS. Fitch Ratings has affirmed Henderson European Growth's 'Strong' Fund Quality Rating and removed the fund from 'Under Review'. The fund is managed by Henderson Global Investors.

Fitch placed the fund's rating 'Under Review' in October 2014, following the announcement of the departures from Henderson of the lead portfolio manager (PM) Richard Pease and supporting analyst James Milne. Fitch has removed the fund's rating from 'Under Review' due to the retention of Simon Rowe (previously co-PM) as the fund's PM, the fund's continued adherence to its investment style and the continuation of the fund's strong performance track record.

The investment process and philosophy of the fund remain unchanged and Fitch believes that the capacity of the fund to outperform peers on a risk-adjusted basis has not been affected.

The 'Strong' rating reflects the fund's clear focus on bottom-up stock picking via traditional, fundamental analysis conducted by a highly experienced PM. The fund has performed strongly against peers and the relevant Lipper category since inception in 2001.

KEY RATING DRIVERS

Fund Profile
Launched in July 2001, the UK-domiciled Henderson European Growth Fund is a sub-fund of the Henderson Investment Fund OEIC. It had GBP1.0bn of assets at end-March 2015.

Investment Process
The investment focus of the fund is strongly based on bottom-up stock picking. The portfolio has a mid-cap bias compared with the fund's reference index and peers, and focuses on identifying cash-generative companies, with strong management teams. The fund's investment edge resides in the experience of the PM in identifying long-term investment opportunities with attractive valuation.

The portfolio is constructed without any reference to a benchmark (although the FTSE Europe ex UK index is used for performance and investment risk-monitoring) and can therefore reflect significant country and/or sector bets. The fund is more predisposed to market regimes that are driven by companies' long-term fundamentals, without being led by one particular sector or region.

Resources
The fund is managed by Simon Rowe who has 24 years of investment experience. Mr. Rowe previously co-managed the fund since 2001, and has assumed his current role as the fund's sole PM following Mr. Pease's departure. He is supported by a European equity team of 12 staff. European equity managers at Henderson have an average of over 20 years of experience. However, the reliance of the investment process on the PM results in some key person risk.

Track Record
The fund has demonstrated a superior track record since inception. Over five years to end-March 2015, the fund has achieved a 59.9% total return (net of fees; A Acc share class) compared with a benchmark return of 41.6%, and with annualised volatility 3.2 percentage points lower than the benchmark. The fund has also outperformed the relevant Lipper category, Lipper Global Equity Europe ex-UK, over the same period.

Fund Manager
Henderson is a listed, global asset manager with EUR104.6bn assets under management at end-December 2014. Henderson has a long track record of managing European equities and managed EUR19.9bn of European equities at end-December 2014.

RATING SENSITIVITIES

The rating may be sensitive to material changes in the investment or operational processes or resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could result in a downgrade of the rating. For example, notable structural deterioration in the fund's performance or departure of the PM may cause the rating to be placed "Under Review" or downgraded. Conversely, Fitch sees little potential for an upgrade, given the highly discretionary investment process, key person dependency, and the fund's already high rating.

Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure.