The fund managers betting on healthcare and work-from-home themes

Two of Janus Henderson’s leading investment trust managers identify the sectors that have held up relatively well during the crisis.

With the UK and much of the world now months into “lockdown”, it should come as no surprise to investors that many companies have seen serious drops in their revenues and will continue to do so.

This is reflected in the large share price declines of many companies. However, not all parts of the economy have suffered equally. As two of Janus Henderson’s leading investment trust managers explain, certain sectors – and by extension their portfolios, which have exposure to these sectors – have held up relatively well.

Perhaps unsurprisingly in a global pandemic, both managers identify healthcare and pharmaceuticals as serving them well during the recent market turbulence.

Jamie Ross, who manages Henderson EuroTrust, points to his holdings in Novo Nordisk and Roche. He says: “We have maintained a positive stance towards pharmaceuticals and our positions in Novo Nordisk and Roche have both held up significantly better than the market.

“Roche are in the process of trialling a product called Actemra for use in Covid-19 patients with very severe symptoms, and are also working on testing solutions.”

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Similarly, Ben Lofthouse, fund manager of Henderson International Income investment trust, notes: “In areas like [pharmaceuticals] we are seeing benefits, and in areas like healthcare as well, which is the biggest sector that we own.” He points to his holdings in Roche and Sanofi as companies “emerging at the forefront of things like testing and vaccine development”.

Novo Nordisk, Sanofi and Roche were recently identified by Goldman Sachs analysts as ‘GRANOLAS’, an acronym for a handful of stocks seen as Europe’s post-financial crisis winners. The analysts said they expected these stocks to continue to do well in the next market cycle.

Both fund managers have also seen certain companies benefit from the increased amount of time that people are spending at home. 

Lofthouse notes that one of the best-performing areas of his portfolio has been the food industry. He says: “We've seen that for the food companies, eating at home is a trend that is driving and increasing the weekly shop; we are seeing some companies that we own benefit from that.” Ross notes that he has a holding in Delivery Hero, a German takeaway business.

Confined to their homes for most of the day, more people are looking for ways to entertain themselves. That has resulted in an increase in “screen time” for companies that offer online gaming or streaming. Ross says he has exposure to this through his holding in Prosus, a Dutch listed company which owns a large stake in the Chinese internet giant Tencent.

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The shift to working from home has also resulted in the rapid and widespread adoption of technologies such as video conferencing. Lofthouse says that Microsoft has been a big beneficiary of this, with Microsoft Teams being one of the most popular options for hosting work meetings.

However, he notes, that the use of such work-from-home tools requires a large amount of data storage. He notes: “What we do have are telecom towers, data centres and some gaming exposure in the US; all of these companies have been receiving their rents."