Schroder Income Growth Underperforms Benchmark But Increases Payout

LONDON (Alliance News) - Schroder Income Growth Fund PLC on Friday said it slightly ...

Alliance News 9 November, 2018 | 9:26AM
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LONDON (Alliance News) - Schroder Income Growth Fund PLC on Friday said it slightly underperformed its benchmark for the financial year ended August as the fund increased its total dividend.

Schroder Income Growth's net asset value per share at August 31 was flat on the prior year at 315.54 pence from 315.51p.

The fund's net assets were flat at GBP216.7 million.

Schroder Income Growth increased its total dividend by 5.4% to 11.8p from 11.2p.

The fund's net asset value total return for the financial year was 4.0%, below its benchmark, the FTSE All-Share Index, total return of 4.7%. Schroder noted its peer group median fund returned 3.8% in the period.

Schroder Income Growth said its income from investments decreased 4.3% from the year before. The fund blamed the sharp drop in contribution from special dividends - which were half the level from the year before - and exchange rate movements.

Exchange rates were detrimental to the portfolio in compared to a gain the year before. The weakening of the US dollar against sterling particularly hurt London-listed companies reporting in US dollars.

Schroder Income Growth said it portfolio outperformed its index, despite the fund's total return lagging behind its benchmark.

The portfolio outperformance compared to its benchmark index, Schroder Income Growth said, was driven by "positive" sector allocation and the use of "gearing in a rising market".

Scandinavian bank Nordea was the top detractor on the portfolio, due in part to cost overruns from its planned move to Helsinki from Stockholm. Schroder increased its holding due to what it believes is now a low valuation.

London-listed software and IT company Micro Focus International PLC also weighed on Schroder's portfolio due to "profit disappointments" in the first quarter of 2018.

Recently acquired NEX Group was a positive for the portfolio - after it was purchased at a "substantial premium" from CME, the US exchange group, in the spring of 2018.

The robust share price performances of Pearson PLC, Burberry Group PLC and John Laing Group PLC benefited the fund's portfolio.

"Surveys suggest that the UK stock market has rarely been so unpopular with international investors as it is now. It is easy to see why - it is equally rare for the political backdrop to be as unclear - nevertheless the market has continued to provide opportunities to meet our long-term goal," said Chairman Ian Barby.

Shares in Schroder Income Growth were down 0.3% Friday at 276.55 pence each.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Rating
John Laing Group PLC 317.40 GBX -0.69 -
Schroder Income Growth Ord 271.00 GBX -0.37
Burberry Group PLC 1,817.50 GBX 0.66
Micro Focus International PLC 1,463.50 GBX 3.76 -
Pearson PLC 930.40 GBX 0.15
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