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Janus Henderson's portfolio managers discuss why fundamental investing is back this year.

7 March 2023

After last year’s sell-off in public markets, we are back to an environment that favours fundamental investing, according to participants at a recent roundtable hosted by Janus Henderson.

“I think we’re back to a world of fundamental investing,” said Richard Clode, portfolio manager at Janus Henderson and co-manager of the global technology leaders and sustainable future technologies strategies.

“Interest rates are going to stay higher for longer, central banks are going to be tapering and not doing QE and you’re going to have to have a company that is self-sufficient. And we just got away from that in recent years.”

Clode’s views echoed sentiments expressed by other fund managers in recent months who have said that this year is not about making big sector calls but rather about doing bottom-up research to find companies that are well-positioned to prosper in this environment.

The rally in equity and bond markets, which began in October, started to reverse last month as investors grapple with the prospect that the US Federal Reserve may persist with its rate hiking cycle longer than expected due to sticky inflation.

This type of environment increases the risk of recession, which market observers say underscores the need for active management.

Those views were echoed by the other participants and Andy Acker, portfolio manager at Janus Henderson and manager of the global life sciences and biotechnology strategies, also observed that the healthcare sector had seen a polarisation in stock performance lately based on the success of clinical data.

“We saw a real bifurcation, where companies coming out with successful data, positive data, addressing unmet needs performed very well in the market and those that had disappointing data performed poorly. Now you see a real differentiation and as an active investor in the sector that’s the kind of environment that we want to see,” he said.

Clode said that he was bullish on China, citing the amount of pent-up demand following the end to the country’s zero-Covid policy in December.

“We’ve significantly increased our China exposure, specifically around Chinese internet, because we think that’s a great play on pent-up exposure. There are various numbers out there. But $2.6trn of excess savings over the last three years, the GDP of Germany or something, that’s hopefully something that should be unleashed,” he said.

Tim Gibson, portfolio manager and co-head of global property equities, did not share the same enthusiasm as Clode, pointing out that although China had taken a number of steps lately to shore up the embattled property sector including its much-touted 16-point plan, the outlook remained challenging.

“I think the recovery such as it is will probably be more l-shaped than any particular strong bounce back. One has to be open to the possibility that more measures are coming and this could be the bottom. But frankly for us relative valuations and the fact that China is not in our benchmark means we’re probably happy to stay clear from the residential market at this point in time,” he said.

Finally, one of the standout performers last year were macro funds. Macro strategies, which base their holdings on the economic and political outlook of a given country or certain other macroeconomic factors, experienced their best year in decades last year, on the back of some of the biggest interest rate and currency moves in many years.

Andrew Kaleel, portfolio manager at Janus Henderson, said that he expected this year to be much tougher, although he said there were still opportunities with a weaker dollar and also in fixed income.

“Last year was probably some of the easier trends that we were able to jump on board. This year will certainly be a lot more selective. Clearly the weakness in the US dollar will provide opportunities,” he said. “But, of course, bonds at these levels look a lot more attractive, particularly at the short end of the curve.”

Jude Bellingham called on Jordan Henderson's critics to 'put some respect on his name' after he scored England's opener in their dominant last-16 win over Senegal.

Henderson retained his place in midfield, alongside Bellingham and Declan Rice, and he became the first Liverpool player to score at the 2022 World Cup when he slotted in for 1-0, converting Bellingham's cut-back.

The Borussia Dortmund star took most of the plaudits at full-time but Bellingham made his feelings clear on Henderson on his social media.

'Put some respect on his name,' Bellingham wrote, coupled with four pictures of the pair together in the win over Senegal.

Speaking to ITV Sport, Bellingham hit out at the 'rubbish' that is said about Henderson.

'I have seen some of the rubbish that was said about (Henderson) playing,' said Bellingham. 'It's ridiculous. He's so technically talented and he scored another goal in a massive game. He should get more respect.'

Jude Bellingham took aim at Jordan Henderson's critics after England's 3-0 win over Senegal

Bellingham (left) wants more respect given to Henderson (right), who netted the opening goal

Jamie Carragher also praised Henderson after his influential performance against Senegal

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Jurgen Klopp's Liverpool side are under a lot of pressure at home following a rocky start to their Premier League campaign and the World Cup has provided a chance for some of their players to get away from Anfield and find form.

Henderson, Liverpool's captain, took his opportunity on Sunday, breaking the deadlock against Senegal in the 38th minute at the Al Bayt Stadium.

Reds legend Jamie Carragher tweeted: 'Brilliant Jordan Henderson! So often questioned, but always answers in the right way.'

Henderson became the first Liverpool player to score at the 2022 World Cup with his opener

As Opta highlighted, 32-year-old Henderson became England's second-oldest ever World Cup goalscorer after his goal.

However, he has some way to go to catch up to the record holder, Tom Finney, who was 36 when he scored a penalty to equalise five minutes from time against the USSR in 1958.

Henderson was withdrawn to a standing ovation in the 81st minute. He was replaced by Manchester City's Kalvin Phillips with the score at 3-0, and no further goals were scored in the last-16 match.

England were up against it in the early stages of their match against the Africa Cup of Nations champion. It was a nervy start, which was settled by Henderson's goal.

It was Bellingham's (right) pass that set up Henderson for the first goal after 38 minutes

Bellingham's ball across was perfect for Henderson to shoot below Senegal goalkeeper Edouard Mendy and into the net.

Further goals from Harry Kane and Bukayo Saka sealed England's place in the quarter-finals against France, who defeated Poland 3-1 in the earlier game.

England's clash with France is the last of the quarter-finals to be played, when Henderson and Co return to the Al Bayt Stadium on Saturday evening to take on Kylian Mbappe's side.

Liverpool have had a rocky start to their domestic season, and currently sit in sixth place

Liverpool currently sit in sixth place in the Premier League, 15 points behind leaders Arsenal.

It is a far cry from Reds' performances in recent seasons, which have seen them fighting for the top spot.

Klopp's side return to competitive fixtures with the League Cup game against Phillips' City on December 22, ahead of their league clash with Aston Villa on Boxing Day.

biggest names appear to be showing signs of frustration after club captain opted to make his fury at goalkeeper crystal clear in full view of everyone.

The moment came mid-way through the second-half of the Reds' trip to Stamford Bridge to take on a struggling side. Henderson was seemingly fuming with his team-mate for failing to communicate with fellow star Fabinho and nearly costing men dearly.

The Reds' skipper has never been one to shy away from letting his colleagues know exactly what he thinks and it was the same again on Tuesday as he screamed in the face of an equally annoyed Alisson.

While covering the incident live on talkSPORT, England legend Stuart Pearce claimed: “It stems from Saturday, you can see the frustration there."

However, the two were willing to forgive and forget by the time full-time rolled around, as both Henderson and Alisson left the Stamford Bridge pitch arm in arm chatting to each other.

It was a notably underwhelming display from Henderson and co. Liverpool can consider themselves fortunate to come away with a point, as Chelsea were guilty of spurning a number of glorious opportunities throughout.

Klopp rung out the changes before kick-off, making six alterations to the line-up that started Saturday's 4-1 hammering at the hands of Manchester City at the Etihad.

HAVE YOUR SAY!Will Klopp be concerned by Henderson and Alisson's argument? Comment below

Reds icon Jamie Carragher seemed to think that represented a wider issue currently plauging his old side.

Speaking ahead of kick-off, the ex-Liverpool ace told Sky Sports: "No it’s more than you do expect and what Jurgen Klopp’s done since he came in is there’s certain players who just play every game, you know, and those players, some of them aren’t playing tonight.

"You look at the back four, Virgil van Dijk, that’s down to illness we’re told but Trent Alexander-Arnold you’re always expecting to be on that team sheet. Mo Salah being another one, Andy Robertson being another one.

"He hasn't just changed the team, he’s changed mainstays really who are there week-in week-out - not just this season but for years gone by."

Henderson and Alisson were two of the mainstays to remain in the team, though it is unclear how Klopp felt about the pair of them barking orders in each other's faces.

Up next for the Reds is the small matter of a meeting with the league leaders as Liverpool welcome high-flying Arsenal to Anfield on Sunday.

Klopp will surely be hoping his players steer clear of any more on-pitch meltdowns when Mikel Arteta's men roll into town gunning for a first league win in the Red half of Merseyside for the first time in 11 years.

Gareth Southgate is considering tinkering with his World Cup starting XI with Jordan Henderson poised for a recall and Kyle Walker in line for his first start of the tournament against Wales.

Having selected an unchanged team and system against USA following the 6-2 win over Iran, national team boss Southgate is ready to make his first set of changes of the tournament for the clash against Rob Page's side.

Speaking on Monday night, the England boss said: 'We have to balance freshness with stability and that's always a decision you're making when picking a team.'

Kyle Walker and Jordan Henderson are set to start for the first time in this year's World Cup

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Vice captain Henderson could come into the team ahead of Jude Bellingham, who has started the opening two matches here in Qatar.

Behind the scenes, Southgate has made clear to his players that any omissions from the starting XI should be viewed as rotation rather than anything more concrete.

The England staff have told their players that they intend to use the depths of the squad to combat the quick turnaround in matches and the stifling conditions here in Qatar.

Southgate does not want Jude Bellingham and Co to be downhearted if they don't start

Southgate does not want his players to be downhearted if they are not named in the starting XI or lose their place and has made this point to his players.

The big question for the England manager is whether to hand Phil Foden his first start of the tournament amid a growing clamour for the Manchester City star to be unleashed.

While captain Harry Kane is expected to start, Southgate is considering refreshing his forward line with Raheem Sterling, Bukayo Saka and Mason Mount's places under scrutiny.

It remains to be seen whether Phil Foden will receive his first start in Qatar on Tuesday night

There is also significant hope that Walker can start in the game.

The right back and his Manchester City colleague Kalvin Phillips - who would in usual circumstances be key players during the tournament - are yet to play a single minute after recovering from surgeries.

Walker's return to fitness is particularly crucial with Southgate, having started the World Cup with a 4-3-3, ready to switch to a back-five during the tournament.

By Smith Henderson and John Marc Smith Ecco: 352 pages, $28

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The art of collaboration is not generally taught to aspiring novelists. Short of reading “True West” and determining that strangling your writing partner is not a Best Creative Practice, most of us learn that writing is an art filled with dark nights to be suffered through alone. Which is one of the things that “Make Them Cry” — a kinetic new thriller by Smith Henderson and newcomer Jon Marc Smith — such a notable project.

The bestseller list usually holds a few titles by authors, both living and dead, who’ve collaborated with another writer, though a great many are less like partnerships and more like franchises. Think of James Patterson and his small factory of co-writers. But “Make Them Cry” is distinctive for actually being … co-written. Less like Patterson et al., more like Greer Hendricks & Sarah Pekkanen.

Equally noteworthy: It marks Henderson’s first publication since 2014, when his debut, “Fourth of July Creek,” was a literary sensation. Released that summer, the novel went on to earn countless best-of-the-year plaudits — praise that was well-earned. “Creek” follows a social worker, a conspiracy theorist, militias, runaways and an alphabet soup of government agencies in a sprawling Reagan-era tale of violent societal disaffection that presaged much of what our life looks like now, when the fringe is in power and conspiracy is the language of policy.

And so Henderson’s follow-up was a long time coming, but still a surprising turn. After working as a staff writer on AMC‘s western saga “The Son,” based on the book by his pal and fellow University of Texas alum Philipp Meyer, he dove even further into genre and collaboration, writing a bullet-train thriller in partnership with his old friend Jon Marc Smith, a screenwriter and English lecturer at Texas State.

It makes perfect sense to Henderson. “There’s a thing maybe you think you’re supposed to do, or a career you’re supposed to have,” he says. “The only thing that I’ve heard that seems to be honorable is to write what you’re scared to write. Or the thing that’s the hardest. Because that’s probably the thing you’re most interested in exploring.”

“Make Them Cry” focuses on DEA agent Diane Harbaugh — so good at her job, she makes even hit men cry — as she immerses herself in a vast conspiracy that will take her from Los Angeles to Mexico to interrogate a cartel heavyweight with a valuable secret. There’s a Zeta assassin right behind her, corrupt CIA agents closing in around her and the existential ramifications of an unwinnable drug war looming everywhere. There is also of one of the best car chases you’ll ever read. The journey of making it was equally fun and torturous, beginning with a screenplay that just wouldn’t sell.

The duo became friends in 2000 when Jon Marc Smith was an MFA candidate at Texas State, but it wasn’t until 2007, when Henderson was working on his own MFA at the University of Texas, that the two began collaborating, adapting Smith’s as-yet-unpublished novel into the film “Dance With the One” for UT’s Film Institute. The early script version of “Cry” emerged from that process, but their friendship evolved the old-fashioned way: in bars, over beers.

“The first night we hung out together,” Henderson says, “we disagreed and argued about politics and sports.” By the end of the night, they were fast friends, with Smith having convinced Henderson to reconsider subjects ranging from the Clinton presidency to the arc of narrative.

“We argue all the time,” says Smith. “It might sound like we’re angry, but we’ve been working together for 13 years and we learned early on to keep talking. Whenever we disagree with each other, we keep talking.”

Even over Zoom — Henderson reporting in from a sun-dappled Montana living room with a Peloton in the background, Smith from a Texas den stuffed with bookshelves — it’s easy to see how the constant conversation kept them sane in the early days of this decade-long passion project. They’re quick to finish each other’s sentences and stories, particularly those tales of Hollywood that seem like satire but aren’t.

Henderson: “We’d get notes like, ‘Could this be more like ‘Inception’…’”

Smith: “… because ‘Inception’ was the No. 1 movie that week…”

Henderson and Smith: [unintelligible moaning…]

After enough absurd meetings, both realized something important. “We didn’t know what we were doing writing movies at that point. We didn’t know anything,” Smith says. But they did feel they knew how to write prose. “Though neither one of us had published a book,” Smith says — the release of “Creek” was still a few months out — “we just felt way more secure in our knowledge.”

And so they got to work, sharing a Google Document back and forth. For years.

Books

Aug. 21, 2020

Three years in, Henderson says, “We’d written a chunk of it, wrote a proposal, sent it off and were queued up to sell it, and I just had this feeling that something was not OK.” Premonitions of humiliating failure are not uncommon among writers. But Henderson’s niggling wouldn’t go away, until he determined the problem: They’d started the book too late in the story line. Was it a fatal mistake? Maybe not — “They’ll let you publish a bad book,” Henderson says plainly — but it wasn’t one he could abide. As the beginning of a possible series, the book had to start in the right place. Finally, he bit the bullet and called his friend.

“It was difficult,” says Smith. “I don’t know if I agreed right off the bat. He convinced me.” They decide they had prematurely written a sequel; the hero, Diane Harbaugh, was something closer to an antagonist in their draft. They’d need to start from page one, again. “And I knew it was right,” Smith says. Even talking about it now, years in the distance, both writers seem pained by the experience.

Fortunately, they shared a vision of how to move forward. They divided the research —everything from the cross-border drug trade to the impact of opium harvesting in Afghanistan — as well as the pleasure reading (John le Carré, Elmore Leonard, Graham Greene). But for the writing, they did what they’d always done. They finished each other’s thoughts. “It’s never a matter of: One person is plotting it and one person is writing sentences, one person is writing exposition and one person is writing dialog,” says Smith. “When it’s really working well, you don’t even know what you’ve done.”

Henderson puts it more fatalistically: “One of us would change a sentence and then the other person would change it back, and it would go on like that for a month. And then someone eventually would quit.”

The result is a novel reminiscent of Robert Stone’s “Dog Soldiers”: its skin is pure entertainment, but its bones are political. What starts as a violent thriller flips over and becomes an examination of the aftermath of armed conflict, in which sorting the good guys from the bad is less about uniforms and codes and more about personal morality.

Books

April 15, 2019

“This is the only war in the world where both sides want the war to continue,” Henderson says. If that sounds like a lot of weight for a thriller to carry around, this writing team is up to the task, and might be for several more books to come.

Goldberg’s next book, “The Low Desert,” will be out in February.