Seneca Global Income & Growth Trust: Discount Narrowing
Edison | Jul 02, 2015 12:34AM ET
Multi-asset investment for income and growth
Seneca Global Income & Growth Trust (LONDON:SIGT) is an actively managed closed-ended global income fund differentiated from the majority of peers by its multi-asset approach. SIGT’s NAV total return has outperformed its absolute benchmark as well as the FTSE All-Share index and the peer group average over one and three years and since its investment mandate change in January 2012, with significantly lower than average volatility. Paying quarterly, SIGT aims to pursue a progressive dividend policy and has a prospective 4% yield.
Investment strategy: Top-down, multi-asset approach
SIGT’s investment objective is to outperform three-month Libor plus 3% through investing in a portfolio comprising UK and overseas equities, fixed-interest securities and alternative assets including property. The managers use a structured top-down approach to construct a balanced portfolio with asset allocation varied around a core long-term position with a view to adding value through tactical adjustments within set ranges. In addition to asset allocation, target portfolios comprising the team’s best investment ideas are defined for each asset class and these determine SIGT’s portfolio composition. Exposure to UK equities is gained through direct investment with specialist funds used to provide exposure to overseas equities and the other asset classes.
Market outlook: Favouring equities
While global equity market valuations have been rising and the developed market’s forward P/E multiple is close to a 10-year high, Asian and emerging market valuations are well below peak levels, suggesting that opportunities exist for investors allocating selectively across global markets. While bond markets have recently weakened making yields more attractive, equity market yields in general remain significantly higher, making a favourable relative case for equities. Although global economic growth is maintaining a positive trend, a number of global macroeconomic uncertainties exist and related newsflow could lead to periods of increased market volatility. For investors seeking equity market exposure who wish to moderate market volatility, a multi-asset fund such as SIGT could appeal.
Valuation: Recent discount narrowing
Although subject to some fluctuation, SIGT’s share price discount to cum-income NAV has narrowed substantially from 16% in mid-2012 to the current level of c 1%. The strength in recent NAV performance and 4% prospective yield suggest this narrowing can be maintained.
Get The News You Want
To Read the Entire Report Please Click on the pdf File Below
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.