Comments on: Scottish American Investment Company: Built For Resilience

By: ITinvestor

ITinvestor — Sun, 11 Oct 2020 13:39:18 +0000

In reply to Andrew.

Thanks Andrew. Nick gives a good summary above I think.

However, I’m always reluctant to comment on whether funds or trusts are suitable for others, not being authorised to provide financial advice.

For my own purposes, I went for a cheap global index tracker for both my children so the strategy could continue largely unmonitored if for some reason I wasn’t around to keep an eye on it.

Global investment trusts would probably be my second choice although I probably would go for a small group of them rather than a single trust, assuming it was cost-effective to do so.

It’s also worth bearing in mind that most Baillie Gifford funds have had a very good run recently and obviously there’s no guarantee that will continue. Saints is probably the lowest-risk BG trust, though, given its global diversification and income focus.

Lastly, SAINTS managers are both young compared to most other trusts, but they may not be managing the fund for as long as 15-20 years, so that’s another area that may need watching.

By: Nick

Nick — Sun, 11 Oct 2020 12:11:27 +0000

I have about 5% in SAIN and while it will never shoot the lights out its growth-oriented performance has been very solid compared to most generalist or income international funds and it gives me some quarterly income in my SIPP. It has also done a lot better than other income funds like CTY that have chased high yield and lost capital by buying ex-growth dogs. I see it as a low risk counterbalance to my other investments which are generally high risk, and am adding to it slowly as I am nearing 60 and gradually de-risking.
Like you, I find the property element a bit strange and random. As it seems to be in retail/leisure I wouldn’t be surprised to see a valuation hit on it. I’m surprised they never sold it off, especially as with a third party manager it is fees on fees.
I take some reassurance from the high yield end of the portfolio including two of my own direct equity holdings, RIO and BATS.

By: Andrew

Andrew — Sat, 10 Oct 2020 13:57:29 +0000

Very good post. I was thinking of using SAINTS as a long term vehicle for regular investing for my kids. We are talking a period of 15 to 20 years. Have you any thoughts on this or would you suggest another alternative.

By: ITinvestor

ITinvestor — Wed, 01 Jul 2020 13:31:18 +0000

Thanks, David.

I think the debenture issue is working itself out now, especially now it has been refinanced early. It’s got less than two years left to run, so there’s only around £3m in interest charges left to pay.

The property portfolio is an oddity, though, and it’s yet to be revalued in 2020. The fact that it predates Baillie Gifford taking over management of the trust surprised me as well.

Not familiar with either of those funds you mention but the top ten holdings look pretty promising in both cases.

By: David P

David P — Wed, 01 Jul 2020 07:00:45 +0000

Apologies for this belated comment to your interesting dissection of SAINTS.
I’ve thought about Scottish American for some time but the expensive debenture and its purely UK-focused property portfolio (which feels out of place in a global income fund) have put me off.
I recently invested in a couple of open-ended global income funds:
i) Liontrust Global Dividend which has been on a strong run since the change of manager to the memorably named Storm Uru in August 2017.
The manager gave an interesting presentation on the “Brighttalk” channel a few weeks ago (you will need to register with Brighttalk, I think):
https://www.brighttalk.com/webcast/706/418792?utm_source=brighttalk-portal&utm_medium=web&utm_content=liontrust&utm_campaign=webcasts-search-results-feed
ii) TB Chawton Global Equity Income which was launched in May 2019 and is at/near the top of the IA Global Equity Income sector since then, although early days of course.
These latter two OEICs are more total return than purely income focused and thus lower yielding than Murray International and JGGI, but in capital terms they have outperformed the global equity income ITs over 6 months, 12 months and in Liontrust’s case 3 years.

By: Ben

Ben — Thu, 18 Jun 2020 16:07:04 +0000

Thanks both, yes I should have clarified that I meant trusts where the manager (s) use a value-based style rather than a growth-based one. I’ve looked at a couple of the ones mentioned but definitely not all of them so will have a look, thanks.

By: tom_grlla

tom_grlla — Thu, 18 Jun 2020 10:41:02 +0000

Ben – I suppose one could argue that Pershing Holdings is a ‘value investment’ if not having a value-focused style, given it’s on over a 30% discount. Of course, is there a catalyst to realise that value? (I don’t know but suspect not).

Obviously, the definition of Value is more tricky than ever, it means so many different things to different people. My quick take is that the acceleration of technological disruption is creating more Value Traps, and it feels that there’s not much that looks ‘cheap’ that’s not a Value Trap.

There is always the odd Special Situation (annual reports of funds like AVI Global are good for e.g. discounted Holding Co ideas) but I’m not sure whether there is enough ‘value’ about for a fund.

Thanks, IT Investor for the write-up. Feels a bit like Baillie-Gifford-lite to me – no great appeal I can see!

By: ITinvestor

ITinvestor — Thu, 18 Jun 2020 09:34:34 +0000

In reply to Ben.

Thanks Ben.

I wouldn’t say there are a great deal of value-focused investment trusts around but it’s somewhat of a loose term so it depends how you are defining it.

Among the global trusts, Scottish Investment Trust, AVI Global, Seneca Global G&I and Murray International seem the most likely candidates off the top of my head, with maybe RIT and Caledonia having a bit of both growth and value. Then there’s the likes of Personal Assets, Ruffer, and Capital Gearing, which have dialled down their equity exposure significantly in recent years, for those who want fixed-income exposure as well.

By: Ben

Ben — Wed, 17 Jun 2020 18:09:26 +0000

Well written, as per usual! At the moment I’m having a look for value-based trusts for diversification, am I right in thinking these are fairly uncommon? Certainly most value based open ended funds seem to only concentrate on the UK!