HENDERSON FAR EAST INCOME: 18 years of progress – however there IS a catch…

Investment trust Henderson Far East Income is a dividend-seeker’s dream. Not only has it delivered 18 consecutive years of dividend growth, but its shares offer double-digit annual income of 10.2 per cent.

A heavenly mix for income-focused shareholders.

There’s a catch, however, in the shape of a lacklustre share price performance, which mean the trust’s overall returns don’t stack up brilliantly against rival Asia Pacific equity income funds.

But manager Sat Duhra is on the case, slowly repositioning his fund’s portfolio to deliver more capital return while not sacrificing its income appeal.

Duhra, who runs the £474 million stock market-listed trust from Janus Henderson’s London office, after 12 years in Singapore, took the fund’s helm in October 2023. He inherited a portfolio of high dividend stocks, many of which weren’t providing attractive share price profits.

Since then he has gently introduced more growth companies into the fund to boost returns – the likes of South Korean tech giant Samsung Electronics, Taiwanese semiconductor specialist MediaTek and Chinese technology companies Alibaba and Tencent. It’s a strategy that is beginning to deliver results.

Over the year to January 8, 2026, and the year to January 8, 2025, it generated attractive total returns of 18.7 and 22.5 per cent respectively. The first figure is lower than the average for its peer group (28.5 per cent), but the second is higher, as that year the average return was 18.9 per cent.

‘The trust is a great income story,’ says Duhra, ‘but if we can capture more capital growth, it becomes an even better overall investment proposition.’

As part of the transition to a portfolio embracing both income and capital growth, Duhra is happy to boost income returns by selling ‘call options’ on a portion of some of the fund’s newer growth stocks.

These provide income from the premiums that the buyers of the options pay the fund, but they can make a dent in the fund’s profits if the buyers are subsequently able to purchase (exercise their right to) the underlying shares on the cheap (below market value).

It’s an approach Duhra is 100 per cent comfortable with. He says: ‘In effect, we are getting some good income from exposure to some great companies which further down the road will become far more dividend-friendly in their own right.’

The income environment across Asia, says Duhra, is becoming far more shareholder-friendly, spreading from Japan to encompass companies listed in China, Indonesia, South Korea and Taiwan. With pay-out ratios still low, he believes the potential for future dividend growth is huge.

‘Dividend surprises are now more of a feature in Asia,’ he adds.

For example, fund holdings such as South Korean semiconductor company SK Hynix and aluminium producer China Hongqiao have all recently paid dividends in excess of market expectations.

The fund plays into key Asian economic themes such as the growth in banking (it has a top-ten stake in Indian bank HDFC) and spending power among the middle classes (Chinese online travel agent trip.com).

In the last financial year (to the end of August 2025), the trust paid dividends totalling 24.9p a share. This compares to 24.6p in the previous year. The shares currently trade at £2.46.

The fund’s market ticker is HFEL, its identification code is B1GXH75 and annual charges total 1.08 per cent.

Other Asia Pacific equity income trusts are run by Aberdeen, Invesco, JP Morgan and Schroders.