Today listed Scottish Investment Trust announced that despite a challenging half-year to 30 April, it will continue its tradition of increasing its dividend, which would make it the 37th consecutive hike in a row.
In an alert to the market, the investment company said it had prepared for a difficult market “by building, during more plentiful periods, a substantial revenue reserve amounting to more than 2.5 times last year’s regular dividend”.
However, the paying of a dividend does not mean everything is fine within the world of investment trusts. Last Friday, Edinburgh Investment Trust released its full year to 31 March results which confirmed, as everyone knew, that Invesco had been removed as manager of the portfolio.
Scottish Investment Trust benefitted from its gold mining holdings, including the two largest players in the sector, Newmont and Barrick Gold. These two miners added over £32 million in total returns for the trust as investors sought the safe haven of gold during the darkest parts of the COVID crisis. The trust even added two more listed miners to its portfolio, AngloGold Ashanti and Gold Fields which combined added over £4 million to total returns.
The fund also scaled back its investments in financials which were hit by a weakening economic outlook. These included FTSE 100 stalwarts such as Lloyds and RBS as well a European banks such as ING and BNP Paribas.
Gearing was reduced quickly as to not amplify losses, at 30 April 2020, gearing was removed and the trust moved to a 5 percent cash position instead. Manager Alasdair McKinnon said this was done to “shelter funds from a market decline and to preserve firepower for a period of sustained recovery”.
Mr McKinnon added in his outlook: “Governments have created a tremendous source of new money that, bluntly, will have to go somewhere. The money printer, to reference a popular internet 'meme' has gone 'Brrrr'. The crisis has allowed the adoption of extraordinary and open‑ended fiscal and monetary measures that would not previously have been countenanced under the guise of 'prudence'.”
