Fund of the week: Will new strategy pay off for this fund?

Fund manager John Bennett has embarked on a new direction in an effort to revamp the Henderson European Focus Trust (LSE: HEFT).

"We have moved to take more active sector positions against the benchmark in order to differentiate ourselves from other passive strategies in the market, albeit at the expense of greater volatility," Bennett told Investment Week.

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The £90.4m trust has large holdings in healthcare and pharmaceuticals, the latter currently at 20.5%. However, Bennett told Fund Strategy that this could rise to 30%. Despite concerns over patent expiries, drug failures and regulation, he remains optimistic: "Science has not gone away," he says. "Today they do not need to find a single new drug to make money out of pharmaceuticals. Why? Because they are not priced to find new drugs."

Bennett expects companies to bolster cash flow by targeting markets where constant drug innovation is unnecessary, such as generic drugs, nutritional foods, animal health and emerging markets. Companies could still discover blockbusters, but "we as shareholders are not asked to pay a premium for that. We are just buying their cash flow."

Contact: 0800-856 5656.

Henderson European Focus Trusttop ten holdings

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Nestl	5.2%
Roche	4.5%
Novartis	4.3%
Sanofi	4.1%
Total	3.9%
Elekta	3.6%
Reed Elsevier	3.5%
SAP	3.1%
Henkel	3.1%
Rexel	2.2%

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