The Scottish Investment Trust
Portfolio reset for a ‘multi-year recovery’ ahead
23 March 2021
The Scottish Investment Trust (SCIN) seeks to provide investors with above-average long-term returns, by investing in undervalued international companies. The trust also targets regular dividend growth ahead of UK inflation. SCIN’s team, led by manager Alasdair McKinnon, are contrarian, value-focused investors who believe the market is significantly underestimating the strength of the post-pandemic recovery and its capacity to support cyclical and value-type stocks. In February, he revamped the portfolio to take advantage of what he sees as the many ‘tremendous opportunities’ among unloved areas of the market that he believes will benefit from the multi-year economic rebound he foresees. There are very early signs that these changes are having a positive impact on performance (see chart). MORE »
Keeping income flowing in a dividend drought
2 December 2020
The Scottish Investment Trust (SCIN) aims to give investors an accessible, low-cost way to invest in undervalued international companies, while boosting returns through the provision of a growing dividend. The manager, Alasdair McKinnon, adopts a highly differentiated contrarian approach via a portfolio that is diversified across regions and sectors. SCIN has delivered solid long-term performance in absolute terms and consistent outperformance of UK equities. McKinnon believes the global market offers many opportunities ripe for exploitation once the economic outlook improves and political uncertainties abate. SCIN has a long record of regular annual dividend increases and offers a yield of 3.3%. MORE »
Contrarian approach paying off in tough times
23 April 2020
The Scottish Investment Trust (SCIN) employs a high-conviction, global contrarian approach, aiming to deliver long-term, above-average returns via capital growth and rising income. It seeks to do this by ignoring the crowd, anticipating change and identifying a diversified portfolio of undervalued international stocks that will benefit when change comes. Manager Alasdair McKinnon views minimising losses during turbulent episodes as a key part of maximising long-term returns. Current positioning, implemented ahead of the severe market weakness triggered by the COVID-19 crisis, is thus intended to preserve capital and ride out the volatility. This pre-emptive approach has paid off, as the trust has outperformed during the downturn. MORE »
Executive Interview
14 October 2019
The Scottish Investment Trust adopts a contrarian approach to investing in companies around the world, seeking to ignore the ‘madness of crowds’ and instead invest in deeply unloved areas of the stock market, where recovery potential has been overlooked by the majority of investors. It aims to reward shareholders with above-average returns over the long term and to achieve dividend growth ahead of UK inflation. In this interview, Alasdair McKinnon, manager of The Scottish Investment Trust, explains what being a contrarian investor means in practice and how this is facilitated by being independent of any fund management group. He also highlights some of the out-of-favour areas of the global stock market where he is currently finding attractive investment opportunities. MORE »
Golden opportunities for contrarian fund
1 October 2019
The Scottish Investment Trust (SCIN) seeks to ignore the ‘madness of crowds’ and invest in deeply unloved areas of the global stock market, where recovery potential has been overlooked by the majority of investors. Absolute returns have been strong year to date (1 January to 31 August 2019), with share price and NAV total returns of more than 10%. However, performance has lagged the strong rebound in global indices, which have been driven by a relatively narrow range of highly valued stocks. Manager Alasdair McKinnon is backing areas including gold miners (the outlook for gold is positive given lax monetary and fiscal policy against a worsening economic backdrop, yet miners have remained out of favour) and telecoms, which offer limited economic sensitivity and attractive dividend yields. MORE »
Growth and income from a contrarian portfolio
20 December 2018
The Scottish Investment Trust (SCIN) seeks to provide investors with capital growth and a growing income, by investing in companies around the globe that are unloved by the majority of investors. The core of its portfolio (74% at 31 October 2018) is in ‘ugly ducklings’ – stocks that are both out of favour and operationally challenged – as lead manager Alasdair McKinnon says these can generate higher than average returns over the longer term. Because of its contrarian style, SCIN has no benchmark, and generally is not exposed to ‘hot money’ investments like US and Chinese internet stocks, instead focusing on areas such as bricks-and-mortar retail (where the manager sees the perceived threat from online competition as overdone), European and Japanese banks, ‘big pharma’ (which McKinnon sees as having stronger long-term prospects than they are currently being given credit for) and gold miners. SCIN recently announced its 35th consecutive annual dividend rise and offers one of the highest yields in its peer group, at 3.2% (2.7% excluding special dividends). MORE »
Daring to be different
19 March 2018
The Scottish Investment Trust (SCIN) seeks to avoid the ‘madness of crowds’, investing away from the herd in stocks that may be entirely out of favour with the market (‘ugly ducklings’), on the verge of significant improvement (‘change is afoot’), or still undervalued despite being more widely appreciated (‘more to come’). This leads manager Alasdair McKinnon and his team into areas of the market such as banks, food retail and oil companies, which have been somewhat left behind in a stock market rally that may in future be known as the ‘second internet bubble’. McKinnon reports that in spite of average market valuations being at high levels, there is still an abundance of global opportunities for contrarian investors. SCIN’s portfolio is modestly geared on a net basis and has an above-average yield compared with its close peer group. MORE »
Daring to be different
19 March 2018
The Scottish Investment Trust (SCIN) seeks to avoid the ‘madness of crowds’, investing away from the herd in stocks that may be entirely out of favour with the market (‘ugly ducklings’), on the verge of significant improvement (‘change is afoot’), or still undervalued despite being more widely appreciated (‘more to come’). This leads manager Alasdair McKinnon and his team into areas of the market such as banks, food retail and oil companies, which have been somewhat left behind in a stock market rally that may in future be known as the ‘second internet bubble’. McKinnon reports that in spite of average market valuations being at high levels, there is still an abundance of global opportunities for contrarian investors. SCIN’s portfolio is modestly geared on a net basis and has an above-average yield compared with its close peer group. MORE »
Greater conviction for global contrarian
26 July 2017
The Scottish Investment Trust (SCIN) invests globally, with the aim of achieving capital appreciation and above-inflation dividend growth. A self-managed trust with a 130-year history, SCIN follows a contrarian investment style, with a high conviction portfolio of 50-100 stocks drawn from three categories: ‘ugly ducklings’, ‘change is afoot’ and ‘more to come’. The four-strong management team, led by Alasdair McKinnon, uses behavioural finance techniques to exploit the tendency of investors to ‘follow the crowd’. By focusing on stocks that are very unloved, those with operational improvements that have been overlooked, and more popular stocks that can continue to do better, they build in a margin of safety. There is an active discount management programme and the trust has recently announced a move to quarterly dividends from FY18. MORE »
Contrarian approach begins to reap rewards
18 November 2016
The Scottish Investment Trust (SCIN), founded in 1887, is a self-managed global equity investment trust. It has recently taken steps to modernise and streamline its operations, and in October 2015 put in place a focused, contrarian investment process under a new management team. It aims to exploit the behavioural biases of market participants by identifying three types of company: the very out-of-favour; those where improvements have not been appreciated by the consensus; and good companies that could still do better. Recent performance has been strong, but the discount remains wider than average, perhaps reflecting a lack of awareness of the process and team changes. In H215 the trust repaid some of its long-term borrowings, further reducing costs; it now has one of the lowest expense ratios in its peer group, as well as a 34-year track record of dividend growth. MORE »
