Securities Trust of Scotland (STS): The Trojan horse

London, UK, 3 December 2020

Securities Trust of Scotland (STS): The Trojan horse

Securities Trust of Scotland (STS) has had an eventful 2020. Following a competitive selection process, the board appointed Troy Asset Management (Troy AM) as investment manager in September, having served protective notice on Martin Currie in June, following the resignation of former manager Mark Whitehead. The trust is retaining its combined income and long-term capital growth investment objective, while adding a sustainability twist. STS's board has reset the dividend to what it believes to be a resilient level of 5.5p per share. There will no longer be income derived from writing options, and the board aims to steadily grow the dividend from the set level. Troy AM as a house has an absolute return mindset, so capital preservation is equally important within the revised mandate as income and capital growth at a sustainable pace.

STS is currently trading at a 0.7% discount to its cum-income NAV. ln September 2020, the market received the announcement about Troy AM's appointment positively. Since mid-September the discount has stabilised at a narrower than 4% level, having recovered its fluctuations following the news about a change in manager in June 2020. 

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