Kepler Trust Intelligence: New Research

RNS Number : 5059U

Standard Life Equity Income Tst PLC

13 July 2018

 

Standard Life Equity Income Trust: New Research       

13/07/2018     

Highlights:

·     Thomas Moore employs an unconstrained approach that generates the large majority of the trust's income away from the most popularly-held stocks in the sector

·     The fund has outperformed the FTSE All Share benchmark in five out of Moore's seven years at the helm

·      Currently the portfolio is comprised of 70 stocks, with the largest exposures found in small caps (c.30%), almost 23% more than the benchmark and a key differentiator to its peers

·     The past year has seen the discount narrow dramatically, from c.-10% to a premium of c.1% as at the end of March

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Standard Life Equity Income (SLET) aims to deliver an above-average income while also providing real growth in capital and income for investors. This is done through investing in a diversified portfolio, consisting mainly of quoted UK equities. Through exploiting Standard Life's vast network of connections, the team searches for companies with strong and durable cashflows that help to support the consistently growing dividends.

Fund manager Thomas Moore employs an index-agnostic approach, evaluating the changing corporate environment and attempting to identify insights that are not fully recognised by the market.

To achieve this, he places a great deal of emphasis on company visits. Thomas has access to the abundance of information collected by the entirety of the firm, which will meet around 3,000 companies in total, seeking to identify the key changes affecting each business.

Currently the portfolio is comprised of 70 stocks, sitting close to the upper limit of its range of 50 to 70 holdings. The trust's largest exposure is to small caps (c.30%), which is almost 23% more than the benchmark and a key differentiator to peers.

Standard Life Equity Income has outperformed the benchmark over the longer term, delivering total returns of 1,263.7% since launch in 1991, relative to the benchmark return of 785.1%. Thomas and his unique investment approach have also stood out in the UK equity income sector, outperforming the FTSE All Share benchmark in five out of Thomas's years at the helm.

The past year has seen the discount narrow dramatically, from a discount of c.-10% in early 2017, hitting a premium at times during 2018, and currently trading around par. March has seen the fund perform less well in an uncertain UK political environment; however, if the negative implications of Brexit have been overstated, the trust's tilt toward smaller domestically-focused companies could provide a more positive impetus.

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