Schroder UK Mid Cap (SCP)

Schroder UK Mid Cap (SCP) offers exposure to UK mid caps, an area of the domestic stock market that managers Jean Roche and Andy Brough believe benefits from innovation, disruption, and growth. The trust’s holdings typically fall into two broad categories: ‘unique’ and ‘flex’. Unique stocks are companies offering quality characteristics as well as strong growth potential. In contrast, flex stocks tend to be more cyclical businesses trading on attractive valuations, which Jean and Andy buy in anticipation of a turnaround.

Over the past 12 months, the managers have taken advantage of attractive valuations in the UK mid-cap space to build new positions in ‘unique’ stocks. These include, for example, online reviews platform Trustpilot, which Jean and Andy see as a beneficiary of developments in artificial intelligence (AI), as it is one of the most cited sources by AI agents. That said, they have also introduced new ‘flex’ stocks into the Portfolio over the same period, including Kier Group, a company involved in construction, civil engineering, and property management. Jean and Andy see a strong outlook for this business thanks to the UK government’s plans to ramp up housing and infrastructure construction, while many competitors have been exiting the market. Conversely, Jean and Andy have reduced exposure to defence-related names, notably through the sale of Babcock International following its promotion to the FTSE 100 Index.

As the managers have not yet reinvested all the proceeds from their sales, Gearing has been reduced during 2025 and stood at 4.4% at the end of June. In addition, SCP declared an interim Dividend of 6.5p for FY 2026, representing a c. 3.2% year-on-year increase and resulting in a historic yield of c. 3%. Finally, the trust’s Discount currently stands at c. 5%.