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Scottish Investment Trust Remains Confident On "Ugly Duckling" Focus

(Alliance News) - Scottish Investment Trust PLC reported a negative interim total return on ...

Alliance News 17 June, 2019 | 8:19AM
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(Alliance News) - Scottish Investment Trust PLC reported a negative interim total return on Monday, compared to positive returns for comparative indices.

For the six months to April 30, Scottish Investment Trust's total return was a negative 0.5%.

The FTSE 250 firm does not have an official benchmark, but it noted that, by comparison, the MSCI All Country World Index returned 7.2% during the period and the UK-based MSCI UK All Cap Index 6.0%.

Net asset value per share with borrowings at market value fell 1.9% over the first half to 833.0 pence, with the return before tax slumping by 95% to GBP1.1 million.

Scottish Investment Trust is paying a second-quarter dividend of 5.3p, in line with targets and the same as the first quarter. It still plans on paying a 5.3p final dividend.

The best gains in the period came from gold giant Newcrest Mining Ltd, as well as FTSE 100 miner BHP Group PLC. During the period, Scottish Investment Trust also took a holding in Barrick Gold Corp.

Retail had a mixed period, the company continued, but pharmaceutical investments such as GlaxoSmithKline PLC and Roche did bring a positive contribution. Likewise, finance and energy returns were "mixed".

"This period proved a less fruitful time for contrarian investors. Our contrarian approach seeks to find an appropriate balance between risk and reward in all our investments, rather than attempt to ride every wave of investment fashion. The manager believes a prolonged period of excessively cheap money has, once again, encouraged an increasingly reckless attitude to financial risk," said Scottish Investment Trust.

"This means insufficient regard is paid to the cyclicality and valuation of earnings from certain companies that are, currently, perceived as immune to the fluctuations of the economic cycle. This enthusiasm is most ardent for 'disruptive' technology companies which the manager sees as most exposed to share price declines when passions cool," it continued.

"Accordingly, these companies are excluded from our portfolio by choice, despite in many cases their large size, as we see greater opportunity in less fashionable areas of the market."

Scottish Investment Trust said it focuses on "ugly duckling" companies, which it described as poor performing firms with "uninspiring" outlooks. The second focus is on companies going through significant change. A third stock-picking angle is solid performing firms with positive outlooks.

Shares were marginally lower early Monday at a price of 804.76p each.

By George Collard; georgecollard@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Scottish Investment Trust Ord 822.00 GBX -0.48

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