Law Debenture: March 2026 investment trust update

• Most of the trust invests in company shares, with the remainder accounted for by its independent professional services business

• The trust’s managers are experienced UK equity income investors

• The trust has a long history of increasing its dividend

How it fits in a portfolio

Law Debenture investment trust aims to achieve capital growth over the long term while steadily growing the income it pays to investors. It does this by investing in the shares of UK companies, with the trust’s independent professional services business providing further diversification.

The trust could form part of an investment portfolio invested for income or add UK exposure to a broader portfolio.

Investors in closed-ended funds should be aware trusts can trade at a discount or premium to their net asset value (NAV).

Manager

The trust is managed by James Henderson and Laura Foll, who are part of the Global Equity Income team at Janus Henderson.

Henderson began his career as an accountant trainee at Binder Hamlyn. He joined Henderson Global Investors in 1983 and started managing funds and investment trusts in 1990. He’s been a fund manager on the Global Equity Income team at Janus Henderson since 2003 and a co-manager of this trust since June 2003.

Foll joined Henderson Global Investors in 2009 on the graduate scheme. She was an analyst on the Global Equity Income Team before being named an assistant fund manager. Foll has been co-manager of the trust since August 2019.

Process

84% of the trust’s assets invest in the shares of between 130 and 150 companies. Most are UK-listed companies but the managers invest in overseas companies where an alternative can’t be found in the UK market or the overseas company’s shares are more attractively valued. While much of the trust invests in large companies, the managers also invest in higher-risk small and medium-sized companies.

The managers seek well managed, high-quality businesses with a strong competitive advantage, that have shares at attractive valuations. Though the trust aims to steadily grow the income it pays to investors over the long term, not every company held in the trust needs to pay a dividend.

Over the past year, the managers added shares in RELX and London Stock Exchange Group as their valuations became more attractive after falling over concerns AI adoption would disrupt their business models. The managers also invested in packaging manufacturer Mondi and the airline easyJet.

Conversely, the managers sold their investment in consumer goods company Reckitt Benckiser after a period of strong share price growth. Engineering equipment manufacturer Renold was also sold following a buy-out of the company.

The remaining 16% of the trust’s assets is accounted for by the independent professional services (IPS) business. The IPS business provides a range of professional services to other businesses to help them manage complex financial and legal obligations.

The IPS business is broadly split into three sections:

• Pensions – providing trustee services

• Corporate trust - operating internationally to provide trustee services to a broad range of debt issuance markets acting as the bridge between bond holders and bond issuers

• Corporate services – secretarial services, structured finance, and whistleblowing services

As there are a range of underlying businesses operating in these sections serving different end markets, they’re unlikely to all grow at the same pace. Investors should expect the IPS business to account for 15-25% of the trust’s assets. It also provides around a third of the income used to pay the trust’s dividends.

Investors should be aware the trust can borrow money to invest, known as gearing. This is done with the aim of increasing returns, but it could also magnify losses and so increases risk. At the end of the trust's last financial year in December 2025, gearing stood at 12%, up from 11% a year earlier. The managers can also use derivatives, which add risk.

Culture

Janus Henderson is a large investment firm with offices all over the world. It was formed in 2017 from the merger of two long-established groups – Henderson Global Investors and US-based Janus Capital Group.

It values experience and sharing knowledge and ideas between investment teams is an important part of the culture. Managers have the flexibility to tap into the wider group’s resources for ideas and insights but also have the freedom to do their own research and form their own views without having a ‘house view’ placed on them.

ESG Integration

Consideration of environmental, social, and governance (ESG) factors for the investment portion of the trust is delegated to the fund managers. Janus Henderson aims to be a responsible steward of investors’ money, and ESG is an important part of this. All fund managers have access to ESG scoring models and customised ESG research, but the firm believes ESG considerations should go beyond examining numbers. Company site visits, speaking to workers, and questioning company management are just some of the ways fund managers are expected to actively assess a company’s ESG credentials.

Investment teams across Janus Henderson actively engage with the companies they invest in, and the firm’s longstanding Responsible Investment & Governance team provides centralised support on voting and engagement. When it comes to voting, Janus Henderson has a Proxy Voting Committee, which is responsible for establishing the firm’s position on major voting issues and creating guidelines overseeing the voting process. The committee is comprised of representatives from various business areas, including portfolio management, corporate governance, and compliance. The firm’s full proxy voting records are published annually, although no rationale is provided. There is more detail on voting and engagement, including case studies, in the firm’s annual responsibility report.

The IPS business is involved in advancing governance standards in companies it serves, while also seeking to manage its own environmental and social impact. In the trust’s annual report, it provides voluntary climate disclosures, alongside other data such as workforce diversity. The fund managers integrate ESG factors into their analysis, but the investment portfolio isn’t managed to a responsible mandate.

Cost

The ongoing annual charge over the trust’s financial year to 31 December 2025 was 0.56%, a small increase from 0.51% in the previous year. Investors should refer to the latest annual reports and accounts, and Key Information Document for details of the risks and charging structure.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes.

The annual charge to hold investment trusts in the HL ISA, SIPP, or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold investment trusts within the HL Junior ISA. As investment trusts trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

Performance

The trust has performed well since James Henderson became manager in 2003, with its share price rising 1274.33%*. This is ahead of both the FTSE All Share and AIC UK Equity Income sector, which returned 559.44% and 620.16% respectively. Past performance isn’t a guide to the future. The trust also has a history of dividend growth, having raised or maintained the income paid to investors for the past 47 years.

Over the trust's last financial year, to the end of December 2025, its share price gained 22.25% compared with a return of 24.02% for the FTSE All Share index and a 21.61% average return in the sector. The trust’s NAV rose 27.80% over the same period.

Investments in Barclays, HSBC, and Standard Chartered were among the top contributors to the trust’s growth, as UK banks performed strongly. Rolls Royce and Babcock also contributed, as their share prices rose on the intention of many countries to increase defence spending. The managers have since reduced their investments in both companies. Detractors to performance included investments in building materials suppliers Ibstock and Marshalls. Slower than expected housebuilding activity has impacted both businesses, but the managers retain a positive view of the companies’ prospects.

In the IPS business, the corporate trust and corporate services divisions grew at 9.3% and 12.2% respectively, while the pensions division contracted by 0.5%. This gave the IPS business a 7.5% growth rate for the year.

In the trust's financial year to the end of December 2025, total dividends paid to shareholders amounted to 35.5p per share. This is a 5.97% increase on the 33.5p dividend per share paid in 2024.

At the time of writing the trust trades at a premium of 1.30% and has a dividend yield of 3.15%. Yields, like dividends, are variable and aren't a reliable indicator of future income.