3rd Mar 2014 12:40
LONDON (Alliance News) - The Scottish American Investment Company PLC Monday said it underperformed its benchmark in 2013, despite making an absolute return, as a result of the company's exposure to emerging markets.
Net asset value per share, on the fair value measure, rose 12% to 247.0 pence and total return for the year (capital and income) was 16.6%, while the company's benchmark, 50% FTSE All Share and 50% All-World ex UK, gave 21%.
The company said the FTSE All-World Index will be its new benchmark from the start of 2013 because the existing one "no longer reflects the reality that SAINTS is now a Global Equity Income trust with a relatively small UK equity exposure".
"The main explanation for this strong NAV result was the performance of stock markets in the developed economies," Brian Ivory, chairman, said in a statement.
"These form the largest part of the SAINTS portfolio, and they rose sharply in 2013. A fall in the market value of the company's debenture borrowings also served to boost NAV at fair value," Ivory said.
"The NAV total return lagged the benchmark total return of 21% because of SAINTS greater allocation to Emerging Markets and the emphasis on securing income well above average yields in equity markets. The weighting to Emerging Markets reflects that the long term potential here remains considerable," he said.
Ivory said global economic growth has improved but remains below trend. According to Ivory, valuation measures suggest stock markets are not lowly rated.
"This, together with the impact that less supportive monetary policy may have, suggests the outlook for capital returns is modest. However, many companies are very profitable and cash-generative and there is scope for dividend payout ratios to rise," Ivory said.
The company raised its own full-year dividend to 10.2 pence a share, from 9.8 pence in 2012.
The company's shares were Monday quoted at 241.00 pence, down 5.50 pence, or 2.2%.
By Samuel Agini; [email protected]; @samuelagini
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
SCAM.L