30th Apr 2014 17:26
LONDON (Alliance News) - Schroder Income Growth Fund PLC Wednesday said it outperformed its benchmark over the first six months of its financial year but said its revenue return fell.
In a statement, the fund said its revenue return per share of 2.82 pence during the six months ended February 2014 represented a 9.3% decrease on the equivalent figure for 2013.
The reduction in revenue return compared with the first six months of last year was largely down to changes made to the composition of the portfolio, which had the effect of repositioning a proportion of dividends receivable from portfolio companies into the second half of the financial year, the fund said.
In addition, due to unfavourable market conditions, there was an absence of any option premium income, the fund said.
It said the total return in its net asset value was a positive 12.8% during the period under review, outperforming the 8.8% total return of the FTSE All-Share Index. The investment manager said the outperformance came from holdings that benefited from the gentle cyclical upturn in the domestic economy, such as ITV, Daily Mail, Halfords, Carillion and insurance company holdings.
"The disappointments were stock specific: Pearson (where a business repositioning has been taking longer than expected), Tate & Lyle (Chinese competition impacting its sucrose business), and SSE (a power company impacted by political risks)," the investment manager, Schroder Investment Management Ltd, said.
The fund's share price produced a total return of 10.6% during the six months under review and its shares generally continued to trade in a narrow discount or premium range during the period, standing at a discount to net asset value of 1.5% at the end of February, as compared with a premium of 0.6% at the beginning of the period.
"Pleasing as it is to report another double-digit rise in the net asset value per share, there is a sense that the potential for income growth might be at a turning point. Dividends from the UK corporate sector - and the company's income - have now fully recovered from the last recession, but we wait to see whether dividends will continue to rise faster than inflation in a world that remains economically challenging," Chairman Ian Barby said in a statement.
"The investment manager's review is relatively reassuring on this point for the next 12 months, while noting a need for corporate profits to improve if this is to continue into 2015 and beyond," Barby added.
By Samuel Agini; [email protected]; @samuelagini
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