/ BAILLIE GIFFORD /
HEAD
a bottom-up approach is most
crucial,” explains Neary. “By
definition, we cannot invest in
an index and generate an aboveaverage level of income.”
Identifying stocks that are
attractively valued and capable
of supplying a dependable and
growing income stream requires
qualitative and quantitative
assessments on a company-bycompany basis. The most appealing
stocks are those offering a blend of
long-term growth prospects and
an ability to grow dividends even
in the toughest of times – which
may often be when dependability
becomes a greater priority for
investors.
The team carries out its own
research as well as benefiting
from substantial investigations
by Baillie Gifford colleagues.
Four factors are considered when
assessing a company: its long-term
earnings growth potential; income
generation and dividend growth; the
dependability of the income stream;
and the total return potential.
To assist their decision making,
the investment managers also ask
eight specific questions before
deciding to invest, which cover
areas ranging from competitive
advantage and cash and sustainable
dividend flow, to the impact that
the company’s inclusion might
have on the portfolio. “Since we
have incorporated these questions
into our research process, we have
found them extremely useful in our
assessment of investment ideas for
SAINTS and other global income
Providing
an income is
about far more
than finding
companies that
pay high yields
growth portfolios,” says Neary.
Focusing on dividends – which
are paid out every quarter – chimes
with the needs of the Trust’s
shareholders, whilst its ‘bottomup’ investment style focuses on
individual companies regardless
of sector, region or economic
conditions. Turnover is kept low,
with the managers taking a longterm view on prospective holdings.
These holdings are typically
in quality, reasonably valued
companies with a commitment
to dividends and a business
model supporting sustainable
growth and earnings. Income on
its own is rarely enough – the
portfolio is built on a belief in the
combination of income, growth
and dependability. SAINTS is
benchmarked against the FTSE
All World Index, but the portfolio
composition isn’t constrained by
the index. This means there are no
restrictions on the maximum or
minimum exposure to different
industries or regions. The
managers can adjust the balance of
assets and holdings in response to
changing opportunities and risks,
subject to a limit of 15 per cent of
total assets that can be exposed to
individual companies.
DIVIDEND PERFORMANCE
SAINTS’ Total dividend per
ordinary share (net) pence
per share
2011
2012
2013
2014
2015
9.45
9.8
10.2
10.5
10.7
Source: SAINTS IT
Past performance is not a guide to future returns. Investments with exposure to overseas securities c