Schroder Income Growth interims for the six months ended 28 February 2015 were published last night. The fund outperformed the FTSE All-Share Index, achieving a net asset value total return of 7.9% versus the 4.1% recorded by the Index. At the same time, the Company’s share price produced a total return of 6.0%, with the price reaching an all-time high towards the end of the period. They have paid two lots of 2p as dividends. The share price discount to net asset value widened during the six months under review, from 3.1% at the start of the period, to 4.8% at 28 February 2015.
Sue Noffke’s manager’s report says outperformance over the period came from being underweight in oil and gas producers and positive stock selection, in particular from the financial sector holdings. Interdealer broker ICAP benefited from improving revenue trends as central bank moves underpinned significantly increased activity in foreign currency markets. The manager says ICAP has continued to benefit from a shift towards higher-margin post trade and electronic broking activities, whilst implementing a cost-saving programme in its more cyclical broking division.
In the life insurance sector, the holding in Friends Life responded well to news of its acquisition by life insurer Aviva, which is also held in the portfolio; Schroder believe that the deal will create significant cost savings, cashflow and capital synergies. The holding in Legal & General was also beneficial for returns. Among other holdings, the steady outlook and appealing dividend prospects helped the holdings in Imperial Tobacco and Pearson. The disappointments were largely resources-based businesses as prices fell, both in hard commodities (Glencore) and energy (Centrica, Amec Foster Wheeler).
SCF : Schroder Income Growth stock selection adds value