Improved performance from rebuilt portfolio

Henderson Alternative Strategies Trust 27 January 2017 Review

Henderson Alternative Strategies Trust

Improved performance from rebuilt portfolio

Investment trusts

27 January 2017

Price

283.0p

Market cap

£121.6m

AUM

£134.0m

NAV*

323.1p

Discount to NAV

11.9%

*Including income. As at 25 January 2016.

Yield (ex-special dividend)

1.3%

Ordinary shares in issue

43.0m

Code

HAST

Primary exchange

LSE

AIC sector

Flexible Investment

Share price/discount performance

Three-year cumulative perf. graph

52-week high/low

283.0p

202.0p

325.8p

259.7p

**Including income.

Gearing

Gross*

0.0%

Net*

0.0%

*As at 31 December 2016.

Analysts

Sarah Godfrey

+44 (0)20 3681 2519

Gavin Wood

+44 (0)20 3681 2503

Henderson Alternative Strategies Trust (HAST) invests in a portfolio of specialist and alternative funds with the objective of beating longer-term global equity market returns. It allocates assets to five main types of strategy – hedge funds, private equity, property, specialist geography and specialist sector – focusing on funds that private investors would be unable or unlikely to access individually. After a three-year reconstruction process following its move to Henderson, the portfolio now represents the 30-40 best ideas of the investment team, and recent performance has improved dramatically. The trust has instituted a progressive dividend policy and also recently announced a special dividend.

12 months ending

Share price
(%)

NAV
(%)

Composite index* (%)

FTSE World (%)

FTSE All-Share (%)

31/12/12

(15.4)

(12.8)

12.2

11.8

12.3

31/12/13

4.6

5.5

16.3

22.4

20.8

31/12/14

(5.0)

(3.8)

10.8

11.3

1.2

31/12/15

(4.7)

(1.6)

1.5

4.3

1.0

31/12/16

24.2

17.0

30.8

29.6

16.8

Note: Thomson Datastream. Note: All % on a total return basis in GBP. *Composite index is 75% FTSE Developed Index and 25% FTSE Emerging Index.

Investment strategy: Specialist and alternative focus

HAST is managed by Ian Barrass and James de Bunsen, who are responsible for specialist and alternative strategies within the multi-asset team at Henderson Global Investors. Between them, the managers have more than 40 years’ experience in alternative investment, and bring this to bear in seeking out quality funds investing in niche areas including private equity, property, hedge funds, specialist credit and emerging markets. Macro input from the wider multi-asset team helps the managers to express thematic views within the portfolio.

Market outlook: Equity volatility likely

Global equity markets have begun 2017 on a high, with returns for sterling-based investors continuing to be boosted by the weak pound as the UK comes closer to the start of its negotiations to leave the EU. With valuations arguably looking stretched (world equity markets are trading at 18% above their 10-year average forward P/E ratio) and macro and political risks still to the fore, investors may wish to consider an allocation to less volatile and more absolute return-focused assets.

Valuation: Strong performance sees discount narrow

At 25 January 2017, HAST’s shares traded at an 11.9% discount to cum-income net asset value. While wider than the average for peers in the AIC Flexible Investment sector, this is the narrowest point in three years and compares with averages for the trust over one, three and five years of 19.4%, 18.1% and 17.1% respectively, reflecting strong share price performance since mid-2016. HAST manages its discount using tender offers, with 4.3m shares currently being repurchased at a 5% discount to NAV minus costs. The managers also see raising awareness of the trust’s differentiated investment strategy and improved performance as key to achieving a sustained narrowing in the discount.

Henderson Alternative Strategies Trust is a research client of Edison Investment Research Limited

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Henderson Alternative Strategies Trust (renamed from Henderson Value Trust in June 2015) exploits global opportunities to provide long-term growth to shareholders via a diversified, international, multi-strategy portfolio, which offers access to specialist funds including hedge and private equity. Previously the SVM Global Trust and originally the Scottish Value Trust, management was transferred to Henderson Global Investors on 1 April 2013 and the managers have now concluded a three-year process of reconstituting the portfolio.

26 January 2017: Result of tender offer. 4,297,626 shares to be repurchased at a price of 301.3756p per share.

28 December 2016: Terms of tender offer published. Up to 10% of shares may be tendered for repurchase at a 5% discount to NAV less costs. Offer to be approved at 25 January AGM.

20 December 2016: Results for the 12 months ended 30 September. NAV TR +13.4% and share price TR +14.5%, compared with +18.4% for the AIC Flexible Investment sector and +31.2% for the FTSE World index.

Forthcoming

Capital structure

Fund details

AGM

January 2018

Ongoing charges

0.89%

Group

Henderson Global Investors

Interim results

May 2017

Gearing

Nil

Manager

Ian Barrass, James de Bunsen

Year end

30 September

Annual mgmt fee

0.7%

Address

201 Bishopsgate,
London, EC2M 3AE

Dividend paid

February/March

Performance fee

None

Launch date

1991

Trust life

Indefinite, subject to vote

Phone

020 7818 1818

Continuation vote

Three-yearly, next Jan 2018

Loan facilities

None

Website

www.hendersonalternativestrategies.com

Dividend policy and history (financial years)

Share buyback policy and history (calendar years)

Dividends paid annually in February/March. A more progressive dividend policy was adopted in 2013; previously the board had paid out substantially all of net income as dividends, meaning the dividend could fluctuate from year to year.

Since April 2013, the board has elected to manage the discount through tender offers (£12.8m bought back in December 2014). In the January 2017 tender, 4.3m shares (10%) are being repurchased at a 5% discount to NAV less costs.

Shareholder base (as at 12 January 2017)

Look-through portfolio exposure by geography (as at 31 December 2016)

Top 10 holdings (as at 31 December 2016)

Portfolio weight %

Company

Region

Sector

31 December 2016

31 December 2015*

Ceiba Investments

Cuba

Unlisted Cuban real estate fund

5.3

3.8

BlackRock European Hedge Fund

Europe

Equity long/short hedge fund

5.1

7.2

Riverstone Energy

Global

Energy-focused private equity

4.7

3.7

Mantra Secondary Opportunities

Global

Private equity fund

4.3

N/A

Majedie Tortoise Fund

Global

Equity long/short hedge fund

4.2

N/A

Schroder GAIA Indus PacifiChoice Asia

Asia incl. Japan

Equity long/short hedge fund

4.0

4.2

Baring Vostok Investments

Russia/Eastern Europe

Private equity

3.7

N/A

Polar Capital Global Financials Trust

Global

Financials-focused invt. trust

3.4

4.5

Summit Germany

Germany

Commercial property fund

3.4

N/A

Blackstone/GSO Loan Financing

US/Europe

Collateralised loan obligations

3.4

N/A

Top 10 (% of portfolio)

41.5

42.3

Source: Henderson Alternative Strategies Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in December 2015 top 10.

Market outlook: Time for an alternative view?

Major global equity markets have begun 2017 on a high note, and valuations are arguably looking stretched in aggregate, with the world market trading on a forward P/E 18% above its 10-year average (Exhibit 2, right-hand chart). While developed markets are 20% above their 10-year average forward P/E, the figure is only 5% for emerging markets, suggesting better value may be found here.

Many risks remain that investors currently seem prepared to shrug off, such as the uncertain policy direction of the new US administration, elections in Europe, the UK’s Brexit negotiations and the still-divergent nature of monetary policy despite growing evidence of a pick-up in inflation. Against such a backdrop, investors may wish to consider allocating to less volatile asset classes; as shown in the left-hand chart, while property, private equity and hedge funds have lagged global equity returns over the past five years, all are in positive territory and have provided a smoother ride.

Exhibit 2: Market valuation and performance

Strategy performance over five years (total returns, in sterling)

12m forward P/E ratios (Datastream indices)

Source: Thomson Datastream, Edison Investment Research. Note: Hedge funds, property and private equity are Datastream indices.

Fund profile: Differentiated, specialist portfolio

Henderson Alternative Strategies Trust (HAST) began life as the Scottish Value Trust in 1991. Following a period of poor performance under its previous manager, the trust moved to Henderson Global Investors in 2013 as Henderson Value Trust, taking its current name in June 2015 to better reflect its investment approach. HAST invests in a portfolio of specialist and alternative assets, with the aim of beating longer-term global equity market returns through a differentiated investment strategy, focusing on funds that individual investors would be unable or unlikely to access by themselves. It is managed by Ian Barrass and James de Bunsen, members of the multi-asset team at Henderson Global Investors, assisted by Peter Webster. The managers took a patient approach to reconstructing the portfolio after they took on the mandate in 2013, as many of the underlying holdings were very illiquid and a ‘kitchen sink’ approach would have crystallised an unacceptable level of losses. By the end of FY16 (30 September) the process of rebuilding was complete, and the trust now has a core portfolio of c 40 funds covering five broad areas: private equity, property, hedge funds, specialist geography and specialist sector. Performance is now positive over all periods (on an annualised basis) under the current management team.

The trust measures its performance against the FTSE World index, in recognition of its aim of achieving returns in excess of global equities over a three-year horizon. Informal benchmarks include a composite index of 75% FTSE Developed and 25% FTSE Emerging (reflecting the expected geographical spread of assets), and the AIC Flexible Investment sector, of which HAST is a member, which includes trusts with similarly eclectic portfolios.

The fund manager: Ian Barrass and James de Bunsen

The managers’ view: Optimism tempered by risk awareness

Following the three-year process of reconstructing the portfolio and disposing of legacy holdings, HAST’s managers are now focused on ensuring that the trust keeps its specialist focus while also retaining its quality and return dynamics. Barrass and de Bunsen currently have a relatively positive view of the global economy in both developed and emerging markets, although they are conscious of elevated equity market valuations in many areas and retain a net cash position sufficient to cover the £12.95m cost of the 10% tender offer at the end of January.

Rising inflation expectations mean that traditional areas of fixed income remain unattractive, and the managers see the future path of interest rates and bond yields as one of the main determinants of investment returns in the near future. De Bunsen comments that if inflation runs ahead of growth, central banks may have to raise interest rates more quickly than they would like, leading to rising bond yields and contracting equity valuations. In such a situation, he says, the key question for equity investors is whether rising company earnings can offset the contraction in multiples. In fixed income, the trust’s focus on floating-rate specialist credit (mainly senior loans and collateralised loan obligations) means that any rise in interest rate will be positive rather than negative for returns.

Geographically, the managers feel negative sentiment towards emerging markets may have been overdone, particularly as regards potentially protectionist measures under new US president Donald Trump. They point out that not every emerging market relies on the US as a major trading partner, and that following significant investor outflows from emerging markets in the second half of 2016, there is scope for unconstrained and absolute return-focused managers to benefit from volatility.

In terms of overall risks, however, the managers do see potential near-term headwinds as a result of uncertainty over the likely path of the new US administration. A big risk-off move could have a negative impact on the trust’s listed holdings, although these are balanced by less correlated assets such as property, renewable energy and hedge funds with a good track record of downside protection. Barrass points out that following the reconstruction of the portfolio, there is now better quality and liquidity in the underlying holdings, with a skew to strategies with more defined outcomes, such as fully hedged merger arbitrage or high-yielding senior loan funds.

Asset allocation

Investment process: Specialist and alternative focus

HAST is one of three funds run by Ian Barrass and James de Bunsen, who are responsible for alternative strategies within Henderson’s multi-asset team. They are able to draw on the top-down macro insights of the wider team, adding a thematic layer to their fund selection framework. Between them, the managers have more than 40 years’ experience in specialist and alternative investment, with Barrass having particular expertise in private equity, and de Bunsen in hedge funds. The managers use their deep knowledge of the funds sector globally to seek out quality managers of specialist funds that private investors would be unable or unlikely to access, blending these to achieve a portfolio of 30-40 positions that has the potential to beat longer-term global equity market returns with a lower level of volatility.

To add discipline to the portfolio construction and maintain diversification, HAST uses broad strategy limits as set out in Exhibit 3 below. Funds are classified into five types: specialist sector, specialist geography, private equity, hedge funds and property, with core, long-term holdings expected to make up at least 75% of the portfolio, supplemented by shorter-term tactical investments. Each holding is assigned a return target of between 8% and 20% pa over the holding period. Underlying funds may be listed (mainly closed-ended funds) or unlisted (open-ended); unlisted holdings may be with or without redemption rights. Having a blend of fund types should improve overall liquidity, as some holdings may be hard to exit quickly.

Exhibit 3: Strategy split and risk limits

Specialist sector

Specialist geography

Private equity

Hedge funds

Property

Listed*

Unlisted**

% at 30 September 2016

33

10

29

16

12

62

38

% at 30 September 2015

30

14

31

17

8

67

33

Min/max holding

Max 20% per sector

Max 50% EM

0-35%

0-30%

0-20%

50-70%

30-50%

Source: Henderson Alternative Strategies Trust, Edison Investment Research. Note: *Listed funds include investment trusts, REITs and ETFs. **Unlisted funds (eg UCITS) may be with or without redemption rights.

Now that the three-year process of reconstructing the portfolio has concluded, turnover is expected to be relatively low. The trust does not use gearing, as many of the underlying holdings are geared to some extent. Derivatives may be used for efficient portfolio management or hedging purposes.

Current portfolio positioning

At its 30 September 2016 year-end, 40 investments made up 99.9% of HAST’s portfolio. Since then, seven investments have been sold and seven have been bought. This is a significant reduction from the c 70 holdings when Henderson took on the trust, and the portfolio is now more concentrated and higher-conviction, with c 75% of assets in the top 20 holdings and 41.5% in the top 10 at 31 December 2016.

Portfolio positioning is informed by the macro backdrop. Because of elevated listed equity valuations in developed markets, the managers favour private equity (29% of assets at end-FY16). Specialist sector funds (33%) are concentrated in senior-ranked floating-rate credit, in response to rising interest rates, while extended valuations in prime property markets lead to a focus on regional or specialist markets (12% of assets). Following the sale early in FY17 of Ediston Property and South African Property Opportunities, HAST’s only property holdings are the Cuban CEIBA Investments and Summit Germany. The fragile rehabilitation of emerging markets informs a strategy of investing in quality, diversified emerging markets funds in the specialist geography segment (10%), while absolute return-focused hedge funds (16%) are held to ameliorate equity market volatility.

In the private equity segment, exposure is split between more mainstream and mature funds such as Princess Private Equity, Standard Life European Private Equity, HarbourVest Global Private Equity (new in FY16) and Pantheon International Participations (new in FY17), and specialist funds such as Riverstone Energy (focused on shale oil and gas assets), Mantra Secondary Opportunities (which buys private equity assets in the secondary market) and Baring Vostok (a specialist Russian manager). Specialist sector funds mainly encompass floating rate credit such as Voya Prime Rate Trust (a US-focused senior loan fund, first bought in FY16, sold after a period of strong performance and repurchased in FY17), alongside sector specialists such as Polar Capital Global Financials, Worldwide Healthcare Trust (new in FY16) and Biotech Growth Trust (new in FY17).

In specialist geography, a number of legacy emerging markets funds remain in the portfolio, such as the former USSR-focused Firebird Republics, alongside holdings such as the quality-biased, diversified Genesis Emerging Markets, and debt fund Ashmore SICAV Emerging Markets Short Duration (both new in FY16). The Ashmore fund, because of its focus on short-dated bonds, can benefit from passive managers’ need to match their portfolio duration to the index, and can buy bonds as they near maturity and hold on until they redeem at par, which also cuts transaction costs. Two new holdings in FY17 in the hedge funds area are Sagil Latin American Opportunities and Helium Selection. The former is a Latin American long/short equity fund with a proven record of downside protection in difficult market conditions, while the latter is a Europe-slanted merger arbitrage fund, which also has strong risk management characteristics.

Look-through currency exposure is c 30% sterling, 35% US dollar, 20% euro and 15% other.

Performance: Absolute and relative improvement

Exhibit 4: Investment trust performance to 31 December 2016

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Thomson Datastream, Edison Investment Research. Note: Three and five-year and since inception (SI) performance figures annualised. Inception date is 1 April 2013, when Henderson began managing the trust.

With the reconstruction of the portfolio completed by the first half of 2016, HAST’s performance has shown a steady improvement, with less volatility than the benchmark FTSE World index (Exhibit 4). While there has been a boost from the falling pound since the UK’s EU referendum in June (the majority of holdings invest outside the UK), the managers report positive underlying performance from almost all areas of the portfolio in FY16. However, the most significant contributions came from private equity (7.5pp of the 14.6% gross NAV total return and 29.3% of the portfolio), specialist sector (3.9pp of the return and 32.5% of the portfolio) and property (2.1pp of the return and 11.9% of the portfolio). The only area contributing negative performance in FY16 was hedge funds (-0.2pp return contribution and 16.4% of the portfolio, mainly driven by the disappointing Pershing Square Holdings, which was sold). Since the 30 September year-end, positive share price performance has continued, while the NAV and benchmark FTSE World index have appreciated by less.

Exhibit 5: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

SI

Five years

Price relative to FTSE World

(1.1)

1.1

5.7

(4.2)

(25.3)

(31.2)

(51.7)

NAV relative to FTSE World

(1.7)

(2.8)

(0.9)

(10.0)

(26.7)

(33.4)

(50.7)

Price relative to Composite index*

(0.8)

2.1

6.1

(5.0)

(23.5)

(27.1)

(48.1)

NAV relative to Composite index*

(1.4)

(1.9)

(0.6)

(10.9)

(24.9)

(29.5)

(47.1)

Price relative to FTSE All Share

(2.5)

4.0

9.3

6.4

(5.8)

(14.6)

(38.5)

NAV relative to FTSE All Share

(3.1)

0.0

2.4

(0.1)

(7.5)

(17.4)

(37.3)

Source: Thomson Datastream, Edison Investment Research. Note: Data to end-December 2016. Geometric calculation. *Composite index is 75% FTSE Developed Index and 25% FTSE Emerging Index. SI = since inception at Henderson, 1 April 2013.

While HAST has now produced positive absolute NAV and share price returns over all the periods shown in Exhibit 4 since the move to Henderson Global Investors in 2013, performance relative to equity indices has been less favourable over longer periods (Exhibit 5). However, the relative performance versus the FTSE World and composite (75% FTSE Developed and 25% FTSE Emerging) indices is much improved over periods of less than one year, and the trust has outperformed the UK-only FTSE All-Share index over most of the recent periods.

Discount: On a narrowing trend

At 25 January, HAST’s shares traded at an 11.9% discount to cum-income NAV. This is the narrowest point in three years, and represents a substantial re-rating from the 10-year high of 23.7% seen in the market volatility during January 2016. Under Henderson’s management, the discount has averaged 17.6%, in part reflecting the trust’s difficult performance history, but also probably a function of its holdings in less liquid assets (23 January data from the AIC show private equity investment companies at an average discount of 15.4% and hedge funds at 14.9%, for example). The board has chosen to manage the discount primarily using tender offers. As the average discount over FY16 exceeded 10%, a tender offer for up to 10% of shares was triggered, at a 5% discount to NAV minus costs (tender price of 301.3756p per share, based on cum-income NAV of 321.39p at 25 January). A further pick-up in performance together with ongoing marketing efforts could see the discount continue to narrow further.

Exhibit 6: Share price discount to NAV (including income) over three years (%)

Source: Thomson Datastream, Edison Investment Research

Capital structure and fees

Structured as a conventional investment trust, HAST has one class of share, with 42.98m ordinary share in issue at 23 January 2017. This number has been unchanged since a 10% tender offer in December 2014, although with another 10% tender offer (priced at a 5% discount to NAV minus costs) currently in progress, the number will reduce to 38.68m. The trust holds a continuation vote every three years, with the next due at the FY17 AGM scheduled for January 2018.

The trust may gear by up to 20% of net assets, but had no gearing at 31 December 2016, on the basis that many underlying holdings are geared. Henderson is paid an annual management fee of 0.7% of net assets, calculated quarterly and charged 10% to revenue and 90% to capital. There is no performance fee. Ongoing charges for FY16 were 0.89%, a reduction from 0.97% for FY15.

Dividend policy and record

In 2013, HAST announced its intention to follow a more progressive dividend policy with effect from FY14. Previously, dividends had reflected portfolio income and as such had tended to fluctuate. Dividends are paid annually in February or March, with three dividends so far declared under the new policy, amounting to 3.0p, 3.3p and 3.8p for FY14, FY15 and FY16 respectively. The ordinary dividend of 3.8p for FY16 is an increase of 15% on the previous year. However, reflecting an exceptional year for portfolio income (net revenue return of 7.5p per share versus 3.72p in FY15), the board of HAST has also declared a 2.6p special dividend for FY16, bringing the total dividend per share to 6.4p, almost double the FY15 dividend. As in FY15, with the dividend fully covered by income, a transfer will be made to the revenue reserve, which is available to smooth future dividend payments. At end-FY16 (30 September) the revenue reserve stood at 8.66p per share; after the FY16 dividend is paid the reserve will be c 2.37p per share, equivalent to two-thirds of the ordinary dividend for FY16. The tender offer proposed for 2017, if fully subscribed, would reduce the number of shares by 10%, increasing the remaining reserve per share to 2.63p, or 73% of the FY16 ordinary dividend. Based on the ordinary FY16 dividend and the 25 January closing price of 283p, HAST has a dividend yield of 1.3%, or 2.3% including the special dividend.

Peer group comparison

HAST moved to the AIC’s Flexible Investment sector on its creation at the start of 2016. The sector is designed for companies whose policies “enable them to invest in a range of asset types”, so by definition the peers have widely divergent investment strategies, and none shares HAST’s alternatives-focused fund of funds approach. Within the group, HAST is one of the smaller funds. Its recent performance improvement has pushed it up to fourth of 13 peers in terms of NAV total returns over 12 months, although longer-term returns are still well below average. Most of the trusts in the peer group are, like HAST, ungeared. HAST’s discount to NAV is above average, while its ongoing charges are among the lowest in the peer group. Excluding two peers that have a specific income focus, HAST’s dividend yield is in line with the average.

Exhibit 7: AIC Flexible Investment sector as at 23 January 2016

% unless stated

Market cap £m

NAV TR 1 Year

NAV TR 3 Year

NAV TR
5 Year

Ongoing charge

Perf.
fee

Discount (ex-par)

Net
gearing

Dividend yield (%)

Sharpe 1y (NAV)

Sharpe 3y (NAV)

Henderson Alternative Strategies

116.9

22.8

12.1

2.0

0.9

Yes

(12.1)

100

1.4

0.2

(0.8)

BlackRock Income Strategies

288.7

1.5

(2.7)

24.4

0.7

No

(13.5)

110

6.1

(1.0)

(0.8)

Capital Gearing

159.6

13.5

21.8

32.1

1.0

No

1.9

100

0.5

(0.4)

(0.5)

Establishment Investment Trust

38.9

30.3

28.3

36.8

1.3

No

(19.1)

100

2.6

0.8

(0.3)

Invesco Perp Select Balanced

9.3

17.4

16.5

1.2

No

(0.5)

100

0.0

(0.1)

(0.5)

Miton Global Opportunities

55.9

33.0

38.3

66.4

1.2

No

(5.4)

101

0.0

0.7

(0.1)

New Star Investment Trust

67.1

27.5

31.0

37.3

0.9

Yes

(32.1)

100

0.3

0.8

(0.2)

Personal Assets

748.2

12.8

24.4

25.8

1.0

No

1.1

100

1.4

(0.4)

(0.4)

RIT Capital Partners

2,888.0

20.8

35.3

63.2

1.3

Yes

5.2

105

0.0

0.3

(0.0)

Ruffer Investment Company

373.7

15.2

13.0

26.7

1.2

No

3.4

100

1.5

(0.1)

(0.5)

Seneca Global Income & Growth

64.1

19.9

25.2

62.0

1.6

No

2.3

108

3.8

0.2

(0.2)

Syncona

846.0

12.5

19.8

1.3

No

(1.4)

100

1.7

(0.4)

(0.4)

Tetragon Financial

1,184.9

21.8

74.3

129.2

1.7

Yes

(37.4)

100

5.2

1.4

1.9

Sector weighted average

18.0

35.2

65.0

1.3

(5.3)

103

3.0

0.2

0.1

HAST rank in sector

8

4

12

11

12

9

5

8

6

12

Source: Morningstar, Edison Investment Research. Note: TR=total return. Sharpe ratio is a measure of risk-adjusted return. The ratios shown are calculated by Morningstar for the past 12- and 36-month periods by dividing a fund’s annualised excess returns over the risk-free rate by its annualised standard deviation. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

There are four non-executive directors on HAST’s board. Chairman Richard Gubbins took up his position in November 2014, having joined the board in July of that year. Senior independent director Graham Fuller has been a director since 2007. Jamie Korner was appointed in May 2013 and Graham Oldroyd in July 2014. The directors have backgrounds in law and investment management.

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Henderson Alternative Strategies Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. 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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt and Sydney. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Henderson Alternative Strategies Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place,

88 Phillip Street, Sydney

NSW 2000, Australia

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