Securities Trust of Scotland (STS)

[richfool]

4th June:

Martin Currie looks set to lose Securities Trust of Scotland after the board of the global equity income trust served six months’ notice on the investment group after learning its fund manager Mark Whitehead (pictured) had resigned.

A stock exchange statement from Securities Trust of Scotland said Whitehead, who has improved the trust’s performance since taking on the portfolio, would leave Edinburgh-based Martin Currie in December. He joined the Legg Mason-owned group in November 2015 as head of income from Saracen Partners.

The board said it would review its fund management contract in a process that would involve Martin Currie but makes a new appointment likely.

https://citywire.co.uk/wealth-manager/n ... s/a1364276

It looks like Mark Whitehead is going to Sanlam:

20th July

Exclusive: Sanlam taps Mark Whitehead and team for income launch
Former Martin Currie head of income Mark Whitehead and two of his team members are to join Sanlam to launch a fund.

Whitehead, who resigned from the Legg Mason-owned group last month, will join Sanlam at the end of the year alongside co-manager Alan Porter and analyst Laurie Lochtie, leaving the Martin Currie global equity income team with just one member.

The trio will launch a global equity mandate for the South African group to sit alongside Pieter Fourie’s £420m Global High Quality fund. It will be seeded with £200m by the firm, and will focus on sustainable dividends.

https://citywire.co.uk/wealth-manager/n ... h/a1381789

The question now is who will manage STS (Securities Trust of Scotland) which sits in the middle of the global growth and income IT sector and whose performance has been doing well over recent years..

[richfool]

I hadn't see much news about STS lately, so I went looking and found this recent announcement re its dividend.

Date: 28 September 2022
Dividend Declaration

The Board of Securities Trust of Scotland plc has declared a first interim dividend for the year to 31 March 2023 of 1.45p per share, an increase of 5.5% on the equivalent dividend of 1.375p paid in respect of the previous financial year.

Barring unforeseen circumstances, it is the Board's intention to increase the remaining three interim dividends for the year ended 31 March 2023 by at least the same percentage, demonstrating the strong performance of our high quality portfolio during these turbulent times.

The dividend will be paid on 28 October 2022 to shareholders on the register on 7 October 2022. The ex-dividend date will be 6 October 2022.

https://www.investegate.co.uk/securitie ... 01130126B/

I did in the end add STS to my trolley, a couple of months back, partly for its global spread and partly for its defensive slant. It is now managed by Troy.

[richfool]

I have been contemplating a top up of either STS or MYI, but can't decide. Both have global exposure (preferred). STS has a defensive stance, but a lower yield c 2.5%. MYI has a higher yield, is also defensive, is less exposed to the USA and more exposure to EM's, along with some fixed interest. Currently, MYI is my larger holding of the two.

[forrado]

Like you (richfool), I hold both Securities Trust of Scotland and Murray International in my ISA portfolio of 8 investment trusts and have done so for quite some time. As you say, they provide global exposure – currently jointly representing 25% verses my otherwise 75% ISA exposure to the UK.

For the past 5 years, STS has been my ISA’s top performer in terms of total return. The switchover from Martin Currie to Troy Asset Management proving to have been a beneficial move on the capital performance side. Even though shareholders had to suffer a slight trim of income payouts as a result of Troy Asset Management deciding to move the trust’s portfolio furniture around following the move.

Murray International, on the other hand, does a fair amount of its income fishing in different global seas than Securities Trust of Scotland, who prefer to focus of more developed market waters. Of the two, STS has proved more successful than MYI over the past 5 years when comparing total return performance data. Though, when it comes to a regular flow of income generated v. the ephemeral market nature of capital performance the positions are somewhat reversed. Because, when looking at AIC current data …

MYI: Current Yield 4.5% … 5Yr Dividend Growth 2.98% … Dividend Cover 0.91
STS: Current Yield 2.6% … 5Yr Dividend Growth –0.25% … Dividend Cover 0.52

This is why a more or less 50-50 pairing up of these two global income trusts, at a current combined yield of 3.5%, has been my attempt to capture the attractions of both trusts.

[richfool]

Like you (richfool), I hold both Securities Trust of Scotland and Murray International in my ISA portfolio of 8 investment trusts and have done so for quite some time. As you say, they provide global exposure – currently jointly representing 25% verses my otherwise 75% ISA exposure to the UK.

For the past 5 years, STS has been my ISA’s top performer in terms of total return. The switchover from Martin Currie to Troy Asset Management proving to have been a beneficial move on the capital performance side. Even though shareholders had to suffer a slight trim of income payouts as a result of Troy Asset Management deciding to move the trust’s portfolio furniture around following the move.

Murray International, on the other hand, does a fair amount of its income fishing in different global seas than Securities Trust of Scotland, who prefer to focus of more developed market waters. Of the two, STS has proved more successful than MYI over the past 5 years when comparing total return performance data. Though, when it comes to a regular flow of income generated v. the ephemeral market nature of capital performance the positions are somewhat reversed. Because, when looking at AIC current data …

MYI: Current Yield 4.5% … 5Yr Dividend Growth 2.98% … Dividend Cover 0.91
STS: Current Yield 2.6% … 5Yr Dividend Growth –0.25% … Dividend Cover 0.52

This is why a more or less 50-50 pairing up of these two global income trusts, at a current combined yield of 3.5%, has been my attempt to capture the attractions of both trusts.

Thank you for your reply and input forrado. I thought as my post wasn't about politics, mini-budgets or the next PM, that it had fallen on stony ground and got lost in the cracks!

In the event I did top up MYI, along with BRSA (Blackrock Sustainable America income trust), as they were the higher yielders. I felt I wanted to enhance my US income with the latter. STS holds a lot of tobacco, which I was less keen on.

Incidentally, both MYI and STS go ex dividend tomorrow.

[richfool]

I spotted this article, amongst several others on the Trustnet news site.

Although it talks about Trojan Global Income Fund and Trojan Ethical Global income Fund, in fact manager Harries also runs STS which similarly has significant holdings of tobacco stocks. I have to say, personally, am not particularly keen on the idea of holding tobacco stocks, but I do hold STS in part for its global and defensive mandate.

NOTE, the article is quite a lot longer than the extract I've posted.

Troy’s Harries: Nothing can touch tobacco for its risk/reward payoff

28 October 2022

The Trojan Global Income manager was tasked with finding another sector with similarly strong metrics when he launched an ethical fund – but says this wasn’t possible.

By Anthony Luzio,

Editor, Trustnet Magazine

There isn’t another sector in the market that can touch tobacco for its risk/reward trade-off, according to James Harries, manager of Trojan Global Income.

The fund is about to reach its sixth anniversary, while Trojan Ethical Global Income, which the manager also runs, is about to celebrate its first.

Harries said that the latter fund was launched after a client said they were a fan of Trojan Global Income but wanted a strategy that excluded a number of morally questionable sectors, including tobacco.

“We had a choice to make at this point,” said Harries (pictured). “Alcohol and tobacco make up around 13% of Trojan Global Income, and I could have tried to find assets with a similar risk/return profile for the ethical fund.

“But we don't think there's anything that has quite the same risk/reward profile as tobacco. The combination of high returns on capital employed, brand distribution, financial productivity and value from that sector is virtually impossible to replicate.”

As a result, he decided instead to search for companies with a lower starting yield, but a higher prospect of dividend growth. These included names such as Colgate-Palmolive, Universal Music Group, bioscience company Chr Hansen and medical device manufacturer Coloplast.

“The initial income will be slightly higher in Trojan Global Income, but will grow more quickly in the ethical fund,” Harries continued.

“The core client base for Troy is people with irreplaceable capital who need income, which tends to coincide with retirement. We try to provide a growing income without scaring people too much with volatility.

“Because the ethical fund has a slightly lower yield and is growing faster, it may appeal to a younger crowd or people who don't yet have irreplaceable capital, and who are perhaps more conscious of expressing a view with where they invest their capital.”

Harries likes to buy and hold companies for the long term, which means he needs to have confidence they will continue to generate strong cashflows over the next decade or so. This has led him away from areas that are “having their day in the sun” this year, such as defence, where the limited number of potential customers affects pricing power, and natural resources, including oil & gas.

https://www.trustnet.com/news/13338055/ ... ard-payoff