Securities Trust Of Scotland: New Management, New Approach
Edison | Feb 24, 2017 07:41AM ET
Unconstrained approach driving outperformance
Securities Trust Of Scotland (LON:SESTS) aims to achieve rising income and long-term capital growth from a concentrated portfolio of large- and mid-cap global equities. Following the move to a higher-yielding and progressive dividend policy in May 2015, from 1 June 2016 SESTS adopted a new unconstrained, high-conviction investment approach under new manager Mark Whitehead. Performance is now measured versus a peer group of both open and closed-ended funds and in September 2016 gearing was increased from £17m to £25m. The changes appear to be bearing fruit – STS has outperformed its peer group benchmark since the change in investment approach in June 2016.
Investment strategy: High-conviction approach
Manager Mark Whitehead is able to draw on the resources of Martin Currie’s income team, which he leads, to select a balanced portfolio of 35-55 global equities with rising income and the potential for long-term capital growth. The investment approach is unconstrained; companies are selected for their high-quality attributes such as sustainable sales growth, high free cash flow conversion and attractive valuations. The manager also undertakes credit analysis and stress-testing of a company’s cash flow. STS’s income is supplemented by limited use of options. Net gearing of 20% is permitted – at end-January 2017 it was 9.9%.
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Securities Trust Of Scotland - Unconstrained Approach Driving Outper
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