Fund Profile

Securities Trust of Scotland 23 January 2019

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Securities Trust of Scotland. 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

Securities Trust of Scotland (STS) is a broadly diversified global equity income portfolio that aims to deliver a rising level of income and long-term capital growth from a diversified portfolio of equities.

The trust has undergone something of a transformation in recent years, implementing a new progressive dividend policy which allows income to be drawn from capital, and appointing a new manager, ex-Sarasin star Mark Whitehead, who joined Martin Currie as head of income in 2016.

Since he arrived, Mark has built a strong team around himself – including the trust’s former lead manager Alan Porter – and put in place a rigorous investment process which sees potential investments put through a series of ‘tests’ designed to show how they will behave in unpredictable scenarios.

Mark employs an unconstrained, bottom-up approach to stock selection, starting with an investable universe of around 3,000 stocks, paying particular attention to credit analysis and stress testing to identify companies that can demonstrate strong free cashflow, which they believe in turn translates to sustainable dividend growth.

Since Mark’s appointment in 2016, the trust has produced returns largely in line with its peer group benchmark, up until the recent correction which saw the trust lag for stock-specific reasons. The trust offers a solid yield of 3.8% - putting it ahead of the majority of its peers in the AIC Global Equity Income sector in income terms.

At the time of writing, the trust is trading on a discount of -6.53%, well beyond the weighted average discount for the sector (-3.3%), where the large majority of other trusts trade close to par or at a premium, including some which have only marginally outperformed STS over recent years.

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Fund History

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 Flash update: Securities Trust of Scotland
We look at the recent change in management of STS and what it means for investors…
09 Dec 2020 Fund Analysis
STS has a new manager with a strong track record…
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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