Edison review on Securities Trust of Scotland

RNS Number : 9826B

Securities Trust of Scotland PLC

22 June 2016

 

London, UK, 22 June 2016

Edison issues research review on Securities Trust of Scotland (STS)

Securities Trust of Scotland (STS) has revamped its investment approach, appointing Martin Currie's income team head Mark Whitehead as lead manager and adopting an unconstrained and high-conviction strategy to meet its objective of producing real growth in capital and income, rather than measuring performance against a backward-looking market index. The more flexible mandate will allow the limited use of options and the gearing facility will be increased. These changes build on a new dividend policy announced by the board last year, which has brought STS's yield into line with its peer group at more than 4%, and the manager's focus on quality companies with sustainable earnings may enhance future performance and help to narrow the trust's discount to NAV.

At 20 June, STS's shares traded at a 3.2% discount to cum-income NAV. This is wider than the three- and five-year historical averages, partly reflecting generally wider investment trust discounts against a backdrop of volatile markets. The board is active in buying back shares to keep the discount below c 7.5%, but there is potential for it to narrow naturally should the trust's new unconstrained and high-conviction approach prove appealing to investors.

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