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LONDON (Alliance News) - Securities Trust of Scotland PLC on Friday said its net asset value per share including income fell by 12.7% in the first six months of its financial year.
Its NAV per share was down 10.7% on a total return basis in the six months to September 30.
Its share price fell by 12.5% in the period, to 123.50p.
The benchmark index, the MSCI World High Dividend Yield Index, fell by 9.1% on a total return basis in the six months.
"The board is acutely aware of this underperformance," Chairman Neil Donaldson said in a statement.
"Key factors behind the shortfall were gearing, which cost around 1.0% in a falling market, our underweight position and stock selection in the consumer staples sector, and our energy exposure," investment manager Alan Porter said.
"The macroeconomic backdrop is more uncertain now than earlier in the year, leading to a risk that management teams will remain hesitant in increasing their capital spending. While this is good for dividends in the short term, it is less positive over the long term as we need to see companies invest in order to grow," Porter said.
"There are, however, a number of positives for equity markets: valuations, which had been high at the start of the year, are coming down as markets fall and earnings estimates decline by less; global fund manager surveys suggest that on the whole they are cautious, which is supportive for the contrarian investor; and finally, the biggest positive for equity markets is their relative yield premium to most other asset classes. In an environment where investors want, or indeed need yield, this bodes well for businesses with sustainable and growing dividends." he added.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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