Seneca Global Income & Growth Trust (SIGT) is managed by a four-strong team at Seneca Investment Managers, seeking undervalued securities across multiple asset classes in order to diversify the trust’s risk and return drivers. Its UK equity portfolio was particularly negatively affected by the coronavirus-led market sell-off in March, given its focus on domestic, mid-cap value stocks, which performed relatively poorly. However, these holdings could stand SIGT in good stead during an economic recovery. The trust’s board has committed to continue paying quarterly dividends, using reserves where necessary if income falls short, which seems likely given the number of dividend cuts announced by corporates in response to the global pandemic.
High levels of uncertainty due to the coronavirus outbreak have had a major negative impact on global markets, but investors should be encouraged by steps taken by policymakers to help mitigate the adverse economic effects of the pandemic. They should also bear in mind that equity markets have recovered from all past periods of significant share price weakness and gone on to set new highs.
Focus on value across multiple asset classes, using a clearly defined, teambased process. Commitment to maintaining quarterly dividend payments, using reserves when necessary (see Dividend policy and record on page 9). Lower volatility of total returns versus the UK stock market and its peers. Bias to UK equities, which could ensure the trust is well positioned to benefit from an economic recovery.
SIGT actively employs its discount control mechanism (DCM), which was introduced in August 2016, aiming to ensure that its shares trade close to NAV. The trust is currently trading at a 1.1% discount to cum-income NAV, compared with average premiums of 0.4%, 0.7% and 0.2% over the last one, three and five years, respectively. Historically, SIGT has had a progressive dividend policy and currently offers a 5.0% yield. It has grown its annual dividend at a rate higher than UK CPI inflation for the last seven consecutive financial years.