Securities Trust of Scotland (STS) aims to deliver both income and capital growth to shareholders over the long term. Since June 2016, STS has employed an investment mandate that is not constrained by index considerations. The manager, Mark Whitehead, follows a rigorous bottom-up approach to construct a relatively concentrated portfolio of 35–55 high quality, large-cap companies with sustainable earnings and dividend growth. Since the change in the trust’s benchmark on 1 June 2016, STS has delivered an annualised NAV total return of 14.3% to end-August 2019. The board adopts a progressive dividend policy and refreshed the trust’s marketing strategy last year, including the appointment of director, Sarah Harvey, who is a marketing specialist.
Geopolitical events, such as the ongoing US/China trade dispute, have contributed to a cyclical global economic slowdown. Although geopolitics will likely continue to have a significant influence on the direction of markets in the near term, earnings expectations have adjusted to an extent that may provide some positive surprises, and present opportunities, particularly in the UK and Europe.
Rigorous investment process focused on the durability of long-term returns.
A relatively liquid portfolio of high quality companies, which have been stresstested for resilience to adverse market conditions. Portfolio companies rank highly against environmental, social and governance (ESG) criteria.
An active board that is committed to promoting the trust and serving shareholders’ interests.
STS trades at a 3.5% discount to its cum-income NAV, which is below the threeyear average of 6.2%. This is wider than its peers despite a respectable performance and dividend yield. The board is committed to promoting the trust and combined with the continuing solid performance since the change of manager and mandate, there is emerging evidence that the discount is on a narrowing trend.