Scottish Investment Trust has more than matched the world and UK markets with a 9.8per cent net asset value total return in its first full period under new manager Alasdair McKinnon.
The £714million trust, self-managed in Edinburgh and chaired by former Baillie Gifford chief Douglas McDougall, does not have a formal benchmark but in the last full year under John Henderson in 2012-13 it boasted beating the global index over one, two, three, five and 10 years.
In 2013-14 however while matching the 1 per cent return on the all-share index, the trust lagged the 8.8per cent of the global index.
Mr Henderson stepped down last July after 10 years and Mr McKinnon was formally appointed manager in February.
In the six months to April 30, the 9.8per cent NAV total return beat the 9.4percent of the world index and the 9.2per cent from the all-share.
The equity portfolio returned 10.5per cent with little structural change since the year-end, reducing health care and technology while adding to the utilites and consumer sectors. On a regional basis, the largest move was from North America into Japan, "as Japanese companies have made clear efforts to operate in a more shareholder-friendly manner", Mr McDougall said.
The consumer goods holdings produced the highest total return for the portfolio, with a gain of £16.2m, led by branded 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.
Financials were the largest constituent of the portfolio throughout the period and produced a gain of £13.9m. The largest holding, Sampo, delivered a solid performance and an increased dividend. British Land benefited from a strong UK commercial property market, while Sumitomo Mitsui Financial Group gained on the improved outlook for Japan.
Gearing was increased modestly from 4per cent to 5 per cent and along with portfolio changes and special dividends helped deliver a 27per cent rise in income. The interim dividend rises by 4.2per cent to 5p.
The trust spent £3.6m, up from the previous year's £2.5m to enforce its 10per cent discount ceiling with share buybacks, and the discount ended the period at 9per 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."
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