A change in stock-picking strategy and the falling pound has helped the £750 million Scottish Investment Trust (SIT) post bumper annual results.
The Edinburgh-based global-focused trust delivered a total return of 29.4 per cent for investors in the 12 months to 31 October. They will also benefit from a 40 per cent increase in total dividends thanks to strong income generation during the period.
The results – the first full-year figures under a new approach implemented by lead fund manager Alasdair McKinnon – has seen the trust propelled into the top quarter of funds in its sector.
Since being appointed by the historically low-profile independent trust, McKinnon has reduced the number of holdings from 100 to 68 stocks as part of what the trust described as a “high conviction, global contrarian” investment approach which looks to profit from markets over-concentrating on past performance.
McKinnon said the approach was based on the fact that “fashionable companies eventually become overvalued and unfashionable companies eventually become undervalued”.
The company’s largest holding – Australia’s Treasury Wine Estates – saw returns of 105 per cent during the year. Other successful investments included Macau casino operator Sands China, Microsoft and Rentokil Initial.
McKinnon said the Brexit vote and election of Donald Trump as US president may lead a shift in the political and investment environment and that any change “will undoubtedly benefit some companies more than others.”
He added: “We will continue to seek opportunities which we believe will profit a long-term investor.”