Scottish Investment Trust outperforms market with total return just shy of 10 per cent

Investment group Scottish Investment Trust has announced that its net asset value per share total return in the first half of the year fell just short of 10 per cent.

The FTSE 250 group said its net asset value per share total return in the six months to the end of April was 9.8 per cent, marginally ahead of the 9.6 per cent return from the FTSE All-World Index and of the 9.2 per cent return for the UK FTSE All-Share Index.

The £714 million Trust’s equity portfolio also returned 10.5 per cent with little structural change since the year-end.

In a statement on Monday, the Trust, self-managed in Edinburgh and chaired by former Baillie Gifford chief Douglas McDougall, and under new manager Alasdair McKinnon, said monetary stimulus from central banks had been a catalyst for the global stock markets which got off to a solid start in 2015.

The Trust added that it had reduced its exposure to the healthcare and technology sectors in the period and increased its holdings in the utilities and consumer sectors.

The consumer goods holdings produced the highest total return for the portfolio, with a gain of £16.2m, led by jewellery group Pandora and G-III Apparel.

Industrials returned £15.3m, helped by a weak euro and economic recovery in the eurozone. The only loss was from Glasgow’s Weir Group, which was sold as demand slowed for commodity extraction.

The Trust also made a shift regionally from North America to Japan, “as Japanese companies have made clear efforts to operate in a more shareholder-friendly manner”, Mr McDougall said.

Gearing was increased modestly from 4 per cent to 5 per cent and along with portfolio changes and special dividends helped deliver a 27 per cent rise in income.

The interim dividend rose by 4.2 per cent to 5p. The share buyback policy cost £3.6m (£2.5m) to keep the discount below 10 per cent.

Mr McDougall said: “While we worry about how this cycle will end, we take comfort from the belief that our portfolio consists of sound companies, and the uninvested portion of our long-term debt provides around £55m of firepower against the possibility of a setback in equity markets.”

Shares in the Trust were untraded after the open on Monday, having last traded at 661.00 pence.