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Scottish Investment Trust declares dividend despite negative performance

Mon, 15th Jun 2020

Investment company Scottish Investment Trust declared a quarterly dividend, despite having posted a negative first-half performance. The company declared a second quarterly dividend of 5.7p per share, in line with its aim to pay three dividends of 5.7p per share in the year through October 2020 plus a final dividend of more than 5.7p. Scottish Investment Trust's net asset value per share total return for the six months through March was negative 5.8%. The sterling total return of the international MSCI All Country World Index was negative 5.3% over the same time period, while the UK based MSCI UK All Cap Index total return was negative 17.5%. 'We have unquestionably entered a more difficult environment for income generation given the curtailment of dividend payments across the stockmarket,' chairman James Will said. 'However, we have long prepared for such a scenario by building, during more plentiful periods, a substantial revenue reserve amounting, at this interim stage, to more than 2.5 times last year's regular dividend.' Will said a great deal of uncertainty remained about how, and when, the Covid-19 crisis would end. 'In time, the worst effects of the virus will pass but there may not be a definitive end and we may, instead, have to adapt to live with it.' 'The virus brutally exposed a number of systemic fragilities which will no doubt be addressed as the lessons of the crisis are digested.' 'Most obviously, many corporates, in their drive for efficiency, left themselves unable to weather a period of disruption without government support.' 'Meanwhile, the failure of cross-border supply chains to provide critical items at a time of need also represents a further challenge to the trend of globalisation.' 'Although overlooked in recent months, the longer standing 'known' unknowns remain.' 'The post Brexit trade talks appear to be deadlocked, the relationship between the US and China appears to be deteriorating and the plunge in oil prices has the potential to further destabilise a volatile environment in the Middle East.' 'A long lasting legacy of the crisis is likely to be the consequences of the 'whatever it takes' actions to preserve jobs and prevent wholesale bankruptcies.' 'Such a response was unquestionably required but it has had a ruinous effect on government finances and will be very difficult to withdraw.' 'This is not necessarily bad news for equities as the potential for induced inflation could act as a catalyst for the more beaten-down areas of the market. However, at this stage, we maintain our capital preservation mindset.' 'As a trust with over 132 years of history, we know that shocks are a feature of investing and that they present both threats and opportunities for investors.' 'We believe the current disparity of valuations within markets will favour a contrarian approach and the company is well placed for the future.' Story provided by

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