Fund Profile

STS Global Income & Growth 08 June 2023


This is a non-independent marketing communication commissioned by Troy Asset 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.

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STS Global Income and Growth Trust (LON:STS), formerly Securities Trust of Scotland, has been renamed following an internal review to better reflect the overall investment objective of the trust, which is to deliver a growing level of income and provide steady capital growth over the long term. This follows the board’s decision to award Troy the investment mandate in November 2020, due to the ability of the current managers to deliver a rising income, capital growth and standout capital preservation characteristics. This has been demonstrated through their equivalent open-ended strategy, the Trojan Global Income Fund, as discussed in Performance.

STS’s managers, James Harries and Tomasz Boniek, currently maintain a cautious approach due to the uncertain outlook for inflation and interest rates. The pair believe their focus on high-quality companies should offer some protection through those companies’ competitive advantages, surplus cash flows and greater predictability of revenues, as demonstrated by their 40% allocation to consumer staples. The expectation is that such companies should be able to cope better with rising cost pressure and be less impacted by the increased cost of capital (see Portfolio).

James and Tomasz are seeking to optimise the income, quality and growth potential of the portfolio to deliver a sustainable and growing long-term income. The 2023 financial year showed signs of renewed strength through increased revenue per share, resulting in a higher historical dividend yield of 2.9%.

The introduction of the Discount control mechanism (DCM) in 2020 has significantly tightened the discount range and increased the liquidity of the trust, whilst maintaining shareholder value. This is consistent with Troy’s overarching capital preservation strategy.

Analyst's View

We believe James and Tomasz’s ability to balance the income and growth potential of the portfolio has been demonstrated by the resilience of the revenues generated by STS’s underlying holdings and is reflected in the latest, higher dividend. Given their focus on quality and less cyclical businesses, we believe that STS offers a good, long-term option for investors seeking a sustainable and growing dividend over the long term. We think this is particularly important given the elevated cost of debt, which is likely to impact portfolio company earnings and make income a more significant contributor to total returns. We note STS does not seek to maximise yield and higher payouts are available. To some extent, this reflects the underweight to companies that have benefitted from higher inflation, supply disruptions and Russia’s invasion of Ukraine, such as oil and gas producers. However, we believe the ever-increasing pressure to transition away from fossil fuels supports the managers’ decision and adds to the attraction of the approach.

We believe the strong risk-adjusted return track record of the strategy is particularly attractive, given the heightened levels of volatility seen across financial markets. We think this is thanks to James and Tomasz’s patient, valuation-sensitive approach. Furthermore, we view their high conviction and unwavering commitment to quality a refreshingly benchmark-agnostic approach to income investing. Despite facing some challenges during periods when stylistic biases have driven returns, this has allowed them to consistently preserve shareholder value over the long term.


  • Superior record of capital preservation compared to peer group and equity market
  • The managers’ increased focus on optimising income and growth offers the potential for sustainable dividend growth over the long term
  • Strict discount control mechanism ensures shareholder value, provides greater liquidity and constrains discount volatility


  • May underperform during narrow stylistic-driven market rallies
  • Low current yield compared to peers, although dividends are growing
  • Higher OCF relative to the peer group average
Continue to Portfolio

Fund History

14 Dec 2023 Fund Analysis
STS’s balance between quality income and growth may prove resilient in a challenging economic environment…
06 Dec 2023 Fool's gold
Cash would have been a poor investment through this period of high inflation…
08 Jun 2023 Fund Analysis
STS’s focus on optimising the balance between quality income and growth may prove valuable in an uncertain market environment…
11 May 2023 Tipping point
Battered growth strategies have staged a comeback recently, but what happens now?
27 Oct 2022 Fund Analysis
STS’s high-quality global equity income approach has proven resilient over both the long and the short term…
11 Feb 2022 Fund Analysis
A high conviction, high-quality approach to global equity income investing…
09 Feb 2022 The dividend dilemma
We examine the trade-off between earning a current high dividend yield and growing future dividends...
09 Dec 2020 Fund Analysis
STS has a new manager with a strong track record…
09 Dec 2020 Flash update: Securities Trust of Scotland
We look at the recent change in management of STS and what it means for investors…
09 Jan 2020 Full house
The KTI team’s ‘top picks’ for 2019 have delivered strong results…
25 Sep 2019 Fund Analysis
Led by Mark Whitehead, STS offers an attractively valued portfolio of global equities...
03 Apr 2019 Nice guys finish first
We review the rise of ESG, its impact on investment trusts, and the various ways ESG has evolved in the trust world...
06 Feb 2019 Income for the long haul
With 'ISA season' looming we identify investment trusts which offer long-term, dependable income streams for yield-hungry investors...
23 Jan 2019 Fund Analysis
Securities Trust of Scotland (STS) is a broadly diversified global equity income portfolio, which has achieved a solid yield of 3.8%...
31 Dec 2018 Ladies, gentlemen and non-binary persons, start your engines…
With Britain only months away from the bright, sunlit uplands of Brexit and America officially ‘great’ again, we present a selection of ideas for what looks set to be a fascinating year…
29 Nov 2018 Fund Analysis
A broadly diversified global equity income offering with an above average yield of 3.8%, on a very wide discount relative to its peers...
12 Oct 2017 Roaring back…
We analyse the drivers behind the significant outperformance of global active managers in 2017, following what was a very poor year for them in 2016...
03 May 2017 I'm not interested in 'me-too' portfolios...
We meet Securities Trust of Scotland manager Mark Whitehead and ask how he is helping to shape Martin Currie's equity income strategy...
16 Mar 2017 Having your cake and eating it too?
We look into the new fad of trusts paying their dividends out of capital and analyse whether or not it really is a sustainable strategy...
22 Feb 2017 Into the wilderness...
In this detailed study of the global equity sectors, we analyse how managers are positioned in a world of high valuations and seismic political changes...
21 Feb 2017 Fund Analysis
A global equity income fund with an experienced management team and a focus on dividend growth...
11 Nov 2016 Analysis: The mounting threat to equity income trusts' dividends...
With fears over potential dividend cuts across the UK mounting, we analyse how safe UK equity income's dividends really are...
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