Schroder UK Mid Cap (SCP)

Schroder UK Mid Cap (SCP) offers investors exposure to the dynamic opportunity set within UK mid-caps, a segment of the domestic equity market rich in leaders in niche and/or rapidly growing markets. Managers Jean Roche and Andy Brough focus on companies with unique characteristics and the potential to become FTSE 100 constituents in the future, as well as more underappreciated opportunities, for which they anticipate a turnaround. This approach has proven successful over multiple time periods, including the past five years (to 02/04/2025), with SCP outperforming its benchmark, delivering a NAV total return of 59.6%, compared to 49.1% for the FTSE 250 ex-Investment Trusts Index.

Over the past 12 months (to 28/02/2025) Jean and Andy have increased their exposure to stocks in the consumer discretionary sector, noting that UK savers hold healthy levels of savings in aggregate and that certain areas within the sector could benefit from specific tailwinds. For example, they added Currys to the portfolio, expecting the company to benefit from the renewal cycle of electronic devices (see Portfolio).

SCP also has a sizeable allocation to defence stocks, accounting for more than 10% of the portfolio, we believe the largest exposure to this industry of any investment trust. Jean and Andy believe the defence industry is experiencing a growth supercycle and also see it as an attractive, cost-effective way to gain exposure to technology.

Finally, dividends are likely to be a feature of SCP. While the trust does not have an income mandate, Jean and Andy invest in cash-generative businesses with the capacity to pay dividends. In fact, SCP’s dividend has grown ahead of inflation between the trust’s financial years 2015 and 2024 and currently offers a yield of c. 3.4%.