Factsheet: Scottish Investment Trust Ord
Rated Fund 2017-2018. Portfolio revamp pays off
Scottish Investment Trust was formed in 1887. Its returns were relatively insipid in recent years until its current manager, Alasdair McKinnon, took over in February 2015. Since then its performance has improved markedly.
McKinnon has slimmed down the trust's investment management team and cut back on other expenses to bring down its ongoing charges to 0.47 per cent in 2017. The number of holdings in the portfolio has been reduced to just over 50 and McKinnon has adopted a new, contrarian investment approach. He believes that future investment returns are driven by a change in a company's prospects and an accompanying change in perception by the crowd.
There is an active discount control strategy, and we think there is potential for returns to continue to improve under McKinnon, helped by a narrowing discount to net asset value. The discount has narrowed from over 15 per cent in mid 2016 to less than 10 per cent at the end of 2017.
The trust's portfolio is widely diversified both by industrial sector and by geographic location, in order to spread investment risk. However, investments themselves are acquired on the basis of the merits of the individual stocks rather than those of regions, sectors or themes.
Analysts at Winterflood Securities say that McKinnon's approach is to analyse companies through a qualitative and quantitative framework to identify where companies are in the 'sentiment cycle'. This includes assessing potential for further improvement, and whether dividend yields offer an element of downside protection.
Narrative and ratings content all as of 01 January 2018.See all Money Observer rated funds
|Rentokil Initial PLC||4.30 %|
|Tesco PLC||4.06 %|
|Standard Chartered PLC||3.90 %|
|ING Groep NV||3.80 %|
|Newcrest Mining Ltd||3.75 %|
|Gap Inc||3.53 %|
|Royal Dutch Shell PLC B||3.24 %|
|Suncor Energy Inc||3.02 %|
|Sumitomo Mitsui Financial Group Inc||2.95 %|
|GlaxoSmithKline PLC||2.91 %|
|United Kingdom||30.74 %|
|United States||25.53 %|
|Financial Services||21.52 %|
|Basic materials||10.43 %|
|Consumer Defensive||10.37 %|
|Consumer Cyclical||8.98 %|
|Communication Services||5.56 %|
Data provided by Morningstar.
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