Fund Profile

Disclaimer

This is a non-independent marketing communication commissioned by Schroder Investment Management. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Schroder Income Growth (SCF) aims to generate real income growth and capital growth primarily from UK-listed companies. It is managed by Sue Noffke, the lead manager, together with Andy Simpson and Matthew Bennison. They are supported by two analysts, James Goodman and Tom Grady. In addition, the managers draw upon the extensive analyst resources of the wider group. They run a relatively concentrated but diversified portfolio of between 35 to 45 stocks, taking a fundamentals’-based bottom-up process to stock selection aiming to identify mispriced opportunities without a style bias or macro bias. ESG considerations play an important role in the portfolio management process and the managers collaborate with in-house ESG specialists and tools.

The team aims to balance paying a covered current dividend yield greater than the index with growing the dividend over time. In this regard they have been successful, as we discuss in the Dividend section. SCF has a historic dividend yield of 4.2%, higher than that of the benchmark index and its equity income peer group. The trust has almost a year’s worth of income in its reserves and has a consistent track record of raising the ordinary dividend every year since launch. Additionally, its dividend growth has beaten inflation easily over the long-term. Indications are that dividends for the trust will grow again in 2022, however beating today’s high inflation could be a challenge over the short-term. SCF’s total return since Sue took over in July 2011 is comfortably higher than the benchmark’s. Its performance over a five-year period is roughly in line with the benchmark, although better than the peer group.

SCF trades at a Discount of 2.1%, close to the average of its peer group, and has a current gearing level of 12%. SCF has an ongoing charges figure of 0.79%.

Analyst's View

We think Schroder Income Growth could be attractive for income-seeking investors as it offers a yield higher than that of the FTSE All-Share and its peer group average, with strong reserves to support the payout in future. SCF has been consistent in raising the ordinary dividend since its launch in 1995 and has achieved its target easily of growing real income over the long term. The overall performance has been good too, the trust beating the benchmark over the long-term on a total return basis. The portfolio is agnostic regarding style and macro factors and the team’s strength is in stock-picking. Historically, the majority of outperformance has been generated from stock selection, with the mid-cap area being a significant contributor. Sue points out that UK markets are still relatively unloved by international investors, potentially creating attractive opportunities.

While real income growth may not be achieved over the short-term due to the current high inflation levels, we think SCF is well placed to produce long-term real income growth. Portfolio income should be relatively resilient through the presence of companies that have inflation-linked pricing structures, although if current levels of inflation are maintained, even this may not be enough.

Once the persistent level of modest gearing is accounted for, SCF has a beta of 1.16 over the past five years meaning that it has been taking on a fair amount of systematic risk. In theory, SCF should do well in a rising market while being exposed to downside moves, with the gearing contributing.

Bull

  • Consistent track record of income growth easily beating inflation over longer-term
  • Deep knowledge and experience of the management team combined with access to analytical resources of the wider group
  • Aligned to long-term structural growth themes to allow income growth

Bear

  • Short-term inflation likely to be higher than income growth
  • Gearing can magnify downside
  • Mid-cap overweight may bring volatility
Continue to Portfolio
2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

03 May 2024 A new megalo-dawn
Why the FTSE 100 is ready to shake off its shackles…
29 Apr 2024 Results analysis: Schroder Income Growth
SCF’s Sue Noffke has increasingly found opportunities in the out-of-favour small and mid-cap space amidst attractive valuations…
26 Apr 2024 Firing on both cylinders
Why Schroder Income Growth offers investors the best of both worlds…
26 Apr 2024 Here comes the sun
Why the clouds are starting to clear for UK equities…
19 Apr 2024 (Don’t) forget the price tag
With the dollar rallying once again, investors ignore foreign currency movements at their peril…
08 Mar 2024 Ready steady go
We look back at the first week of our event, discussing sectors ripe for recovery…
28 Feb 2024 Catch a falling star
Our analysts discuss three discounted sectors that could be due a rebound…
21 Feb 2024 Pitch doctoring
Our analyst argues the upcoming budget should see radical action to boost the UK market…
08 Mar 2024 Schroder Income Growth
Sue Noffke
Rewatch this webinar as part of our month-long online series 'Themes for your ISA in 2024' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
26 Jan 2024 Fund Analysis
SCF has outperformed the index over the long term and boasts a premium yield to the market…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
13 Dec 2023 In-come all ye faithful
Equity income could be a beneficiary of the higher interest environment, with trusts a good way to capture it…
12 Dec 2023 UK equity’s income opportunity with SCF manager Sue Noffke - Podcast: Trust Issues #23
SCF Manager Sue Noffke tells us why the trust has geared up and is overweight small and mid-cap stocks…
27 Oct 2023 Results analysis: Schroder Income Growth
SCF has a strong track record in delivering both income and capital growth over the long-term…
02 Jun 2023 Investing for income in a world of inflation
The attractive alternatives to cash for UK income investors...
20 Feb 2023 Fund Analysis
SCF has a strong track record of delivering income and capital growth…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
06 Jan 2023 Investment trusts: a rare opportunity in UK small and mid-sized companies
Opportunity knocks for UK small and mid-sized companies – find out why...
16 Dec 2022 Investment Trusts: opportunities in all market conditions
How are current market conditions impacting the Schroders investment trust range?
12 Aug 2022 Fund Analysis
Attractive income and growth prospects from a portfolio of UK companies…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
29 Apr 2020 Kepler Rated: Schroder Income Growth
SCF is a UK focused trust which has raised its dividend every year for the past 24 years...
15 Apr 2020 Hold fast
Investment trusts' revenue reserves could make them a vital stronghold for investors facing UK dividend cuts of as much as 47%....
04 Feb 2020 Fund Analysis
A UK focused trust which has raised its dividend every year for the past 26 years...
05 Dec 2019 Holding something in reserve
A sterling bounce poses a threat to UK dividends - we look at how UK equity income investment trust managers stand prepared…
17 Jul 2019 Ready for action
In the second part of our active management series, we assess the most active managers across the major closed-ended equity sectors…
03 Jun 2019 Knowledge is power
Schroder Income Growth's Sue Noffke discusses how she tactically employs gearing in her trust, the benefits of a fixed capital base and how she balances the demands of a board...
28 May 2019 Fund Analysis
A trust with an exceptional track record for not only outperforming the benchmark, but also for delivering dividend growth...
07 Nov 2018 Everything you wanted to know about Brexit but were too afraid to ask...
Schroders' Sue Noffke answers 23 key questions and highlights some investment opportunities as negotiations move to a crucial stage...
20 Nov 2017 Thin ice...
Our analysis shows the extent to which funds in the UK equity income sector are concentrated on just a few dividend paying stocks…
17 Nov 2017 Fund Analysis
A core UK income trust, managed by an experienced team at Schroders...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
07 Jun 2017 Omnishambles...
Given the huge levels of political-induced uncertainty, we analyse recent drivers and themes within the UK equity market ahead of the upcoming election
30 May 2017 Income funds in focus
We introduce a new rating system designed by us to identify trusts which generate a real, dependable income without sacrificing capital....
11 May 2017 Storm proofing...
Our research shows dividend cover among UK equity income trusts is at its highest level in decade...
07 Mar 2017 A challenge of perception
Asian Total Return Investment Company chairman David Brief says the trust's total return focus is misunderstood by many investors....
20 Feb 2017 Income is king...
The team at Schroders highlight why investors should consider investment trusts if they are aiming for a growing income stream
View all

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