Defence Investment Mastery Through STS Global Income & Growth Trust's Resilient Approach
Going for the gold, but not in a rush – that's the MO of STS Global Income & Growth. Since Troy Asset Management stepped in to steer the ship in late 2020, the investment trust has been all about providing a steady stream of income to shareholders and preserving their capital, even during market turbulence.
This conservative game plan has proven a winner so far, delivering a return of over 35% since November 2020, even though it lags behind the average 43% return for global equity income peers. But Jim Harries, senior fund manager, claims the £287 million trust is succeeding in its mission – navigating a steady path through market highs and lows. He's joined by colleague Tomasz Boniek in piloting this income and growth vessel.
"STS Global Income & Growth should be a high-quality, low-volatility trust in the global equity income space," says Harries. "That means running a tightly-focused portfolio of rock-solid, resilient companies that can produce enough income to boost dividends while keeping shareholders' capital intact."
On the income front, the trust's annual dividend is headed in the right direction. Although a cut was necessary when management took control, it's been slowly bouncing back, rising from 5.7p a share to 6.54p over the last three years. The upcoming fourth-year dividend report (due soon) should up the total to 4.758p for the financial year ending March 31st.
Regarding capital preservation, the trust has shown impressive resilience compared to peers over the past six months, with a gain of 5% compared to the 3.2% loss typical of its peer group. In other tumultuous times, like the start of the Ukraine war in 2022, or sudden interest rate spikes, the trust has remained steadfast.
Currently, the trust holds stakes in 31 companies. Interestingly, its US holdings are limited to a single position in Microsoft, though Harries notes that predicting market trends and global economic shifts can be tricky, especially with unpredictable figures like President Trump in the mix.
Recent additions to the STS Global Income & Growth portfolio include Spanish IT company Amadeus, UK pest control stalwart Rentokil, German tech titan Siemens, and US sportswear powerhouse Nike.
Harries sees potential in Nike, which saw its share price plummet by a third in late 2021. Although the company may need to relocate some production away from Vietnam due to Trump's tariffs, Harries believes Nike's pricing power and enduring quality make it a worthwhile addition to the trust's portfolio.
The trust's annual charges amount to 0.77%, and its market ticker is STS with B09G3N2 as its identification code.
Enrichment Data:
General Insights
- Income Focus: STS Global Income & Growth leans heavily toward income-generating investments, prioritizing steady dividends over capital appreciation.
- Resilience: The fund has shown remarkable resilience during market downturns, maintaining or even growing its value while peers have experienced losses.
Investment Strategy
- Concentrated Portfolio: A high level of concentration in the portfolio allows the fund managers to invest in a limited number of exceptional, resilient companies with strong income-generating potential.
- Quality Investments: The fund focuses on high-quality companies with proven track records and the capacity to withstand market fluctuations.
Performance Metrics
- Net Asset Value (NAV) Growth: A measure of the fund's overall performance by assessing the increase or decrease in the value of its underlying assets.
- Share Price Performance: The improvement or decline in the value of the fund's shares over time, taking into account various market factors.
- Dividend Yield: The return on investment received in the form of dividends, expressed as a percentage of the share price.
Merger Plans
- Troy Income and Growth: A possible merger with Troy Income and Growth could further shape the investment strategy and performance of STS Global Income & Growth. However, details regarding the proposed merger's impact on the trust are not available at this time.
- The STS Global Income & Growth investment trust focuses on generating a steady stream of income for shareholders, while also preserving their capital, even during market turbulence.
- In compared to global equity income peers, the trust has delivered a return of over 35% since November 2020, despite a conservative game plan that lags behind the average 43% return.
- Despite the limited US holdings in Microsoft, the trust's portfolio focuses on quality investments, prioritizing resilient companies with strong income-generating potential, such as Spanish IT company Amadeus, UK pest control stalwart Rentokil, German tech titan Siemens, and US sportswear powerhouse Nike.
- Even during unpredictable times, like the start of the Ukraine war in 2022 or sudden interest rate spikes, the trust has remained steadfast, demonstrating remarkable resilience compared to peers.
- The trust's senior fund manager, Jim Harries, is optimistic about Nike, which saw its share price plummet by a third in late 2021, citing the company's pricing power and enduring quality as reasons for its inclusion in the trust's portfolio.
