Manager Seneca targets returns of at least inflation (CPI) +6% a year net of costs over a typical investment cycle using a unique value-influenced decision-making process across a wide range of assets, says Kepler.
The research group adds that while value as an investment style has been a challenging strategy for several years the trust’s value-influenced multi-asset approach has fared better than might be expected.
“Markets have now priced in broad and elevated insolvency risks, whilst those assets perceived as ‘secular growth’ winners seem valued on the assumption they can continue to take economic share for years to come.”
Such a scenario seems unlikely to be economically or societally sustainable, suggests Kepler.
“The main point being highlighted by the managers of SIGT, that even moderate economic normalisation could cause substantial repricing of ‘value’ relative to growth, is hard to ignore given the levels of value dispersion.
“In the meantime, SIGT investors can benefit from a c. 4.6% yield. This should remain augmented by relatively uncorrelated income streams from ‘specialist assets’.
“Recent amendments to the trust’s policy indicate the board remains supportive of the dividend for the foreseeable future.”
Shares were unchanged at 141.5p.