Saints marching slowly in the UK

The Scottish American investment trust (Saints) has reported a mixed set of results, hampered by underperformance in the UK portfolio.

The £390 million trust is now managed by Patrick Edwardson at Baillie Gifford after the mandate was passed from First State at the start of last year following a period of poor performance.

Over the six months to June the trust saw its NAV (net asset value) rise 8.1% (with its expensive debentures priced at book value), or 6.4% (with debentures priced at market value).

The benchmark, which is 70% the FTSE All Share index and 30% the FTSE World excluding UK index in sterling terms, rose 7.9%. Nevertheless, shareholders benefited with a share price total return of 12.4%.

A second interim dividend of 1.62p will be paid, meaning the payout for the half-year is a generous 9% up on a year ago, reflecting the trust's new focus on dividends.

The UK portfolio rose 6.3%, some way behind the UK portion of the benchmark's 8.2% gain and a performance described as 'frustrating' and 'disappointing' by chairman Brian Ivory.

But performance in the overseas portfolio, which represents around one-quarter of assets, was stronger, with a total return of 12.7% beating the 7.2% gain from the overseas portion of the benchmark. Bonds and property made modest gains.

Edwardson increased equity exposure by roughly halving his bond position towards the end of the period. 'The manager remains relatively optimistic about the outlook for shares: in the UK it is likely that any serious downturn in consumer demand will be offset by interest rate cuts while globally there are few indications that high oil and commodity prices are restraining demand.'

Saints stands on a 15% discount to NAV, in line with its average over the past year. Trusts in the Global Growth & Income sector are on an average current 11% discount.