29 Nov 2016 12:02
London, UK, 29 November 2016
Edison issues research review on Seneca Global Income & Growth Trust (SIGT)
Seneca Global Income & Growth Trust (SIGT) aims to generate income and long-term capital growth from a range of asset classes. Investments are made for the long term using a strategic asset allocation to equities (60%: 35% UK and 25% overseas, with modest US exposure), fixed income (15%) and specialist assets (25%, including property and infrastructure assets, where yields can be in the 5-8% range). Around one-third of the fund is invested in UK mid-caps, where over time returns tend to be higher than for large-caps, and where the market is generally less efficient, providing opportunities for stock picking. There is no exposure to safe-haven government bonds, which the managers consider unattractively valued, and SIGT has lower FX exposure than its peers. Following a change in investment mandate in 2012, SIGT's NAV total return has meaningfully outperformed the FTSE All-Share index, with significantly lower volatility.
SIGT's current 1.8% share price premium to cum-income NAV compares to the average 0.6% premium of the last 12 months and the average discounts of the last three, five and 10 years (3.2%, 6.4% and 7.2%, respectively). While SIGT has no formal income target, the board states that it wants to pursue a progressive dividend policy. The annual dividend has been increased each year since 2013; the prospective dividend yield is 3.8%.
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