/ FUND, PENSION, TRUST /
Pension
Trust
GUINNESS GLOBAL
EQUITY INCOME
SCOTTISH MORTGAGE
INVESTMENT TRUST
16
40%
30%
20%
FILE
10%
0%
-10%
Jan 16
Sep
May
Jan 15
Sep
May
Jan 14
Sep
May
Jan 13
Sep
May
Jan 12
Sep
May
-20%
MANAGERS: James Anderson &
Tom Slater
DISCOUNT/PREMIUM: +2.4%
GEARING: 14%
OCF: 0.48%
80%
FTSE All World (47.27%)
60%
IT Global (37.01%)
40%
20%
0%
-20%
-40%
Nov
IA Global Equity Income (44.36%)
Scottish Mortgage Investment
Trust (83.50%)
May 15
50%
100%
Nov
MSCI AC World (46.08%)
May 14
Guiness Global Equity Income (62.04%)
60%
Nov
70%
British companies that worries
me, rather than the volatility of
disclosure surrounding unquoteds.”
“We think there is a terrible and
dangerous confusion between
risk and volatility in the financial
markets. We think most share
prices and most companies that are
unvolatile are like most states and
people who appear to be unvolatile
and then change dramatically.”
Stifel’s head of research Iain
Scouller says the manager is
aiming to further differentiate
the trust from the rest of the IT
Global sector, but that investors
should realise this comes with the
potential for greater discount risk.
“They need to be careful not to
put too much in unquoteds in case
it scares investors and impacts the
discount rating,” he said.
PERFORMANCE OF TRUST VS SECTOR
AND INDEX OVER 5YRS
May 13
PERFORMANCE OF FUND VS SECTOR AND
INDEX SINCE LAUNCH
Nov
MANAGERS: Ian Mortimer &
Matthew Page
FUND SIZE: £111m
LAUNCHED: 18/01/2011
OCF: 0.99%
seeking to increase permitted
exposure to this area of the market
to 25 per cent of total assets.
He thinks many companies are
now delaying their IPO until later
stages of their development, which
means investors need exposure
before they are listed to capture
the strongest growth. However,
Anderson refutes the claim this
makes the trust more risky.
In a recent interview with FE
Trustnet, he said: “I challenge
anybody to come up with a view as
to why most of the big companies
today are not much more risky in the
sense of permanent loss of capital
than the unquoted companies that
we own, even accepting that plenty
of them could fail.”
“It is that potential destruction of
the vast bulk of the quoted major
May 12
FILE
S
cottish Mortgage is one of
the largest investment trusts
listed on the London market,
with a total capitalisation of £3.5bn.
Launched in 1909, it has come
a long way from its origins as a
vehicle for lending to Malaysian
rubber plantations.
Today it is a portfolio of high
growth stocks at the cutting edge
of technology, such as Amazon,
Tesla, Alphabet (parent company
of Google) and Baidu. Manager
James Anderson believes these
companies and others such as
Facebook and Illumina will outwit
blue chip dividend stalwarts over
the long term.
His strategy of investing
thematically in global trends has
more than proved its worth over the
medium term – Scottish Mortgage
has made 83.5 per cent over the
past five years compared with
37.01 per cent from the IT Global
sector and 47.27 per cent from the
FTSE World index. However, this
strong performance has come at
a price, with the trust proving to
be more volatile than its peers and
benchmark.
Anderson has recently started
to favour unquoted firms and is
Nov
from £349 in the first year to £409 by
the end of 2015.
This dividend track record stems
from managers Ian Mortimer
and Matthew Page’s innovative
approach, which was built from
scratch prior to the fund’s launch.
They start by screening for
companies that have at least 10
years of consecutive cash-flow
returns on investment (ROI) of 10
per cent. After removing companies
with either a market cap below
$1bn or high debt levels, this leaves
them with an investment universe
of roughly 500 companies. After that
they use valuation metrics such as
price/earnings before even looking
at a stock’s dividend.
“In terms of the philosophy,
in the global income space you
Jan 11
T
aking a globally diversified
equity income approach when
building a pension pot makes
a lot of sense.
While the compoun