26th May 2016 10:34
LONDON (Alliance News) - Standard Life Equity Income Trust PLC underperformed its benchmark in its first half, as its decision not to hold a number of resources stocks meant it was unable to see a benefit from a strong rebound in the sector in the first quarter of 2016.
The trust said its total return on net asset value was 0.7% for the half year to end-March, lagging behind the 3.5% total return reported by its benchmark, the FTSE All-Share Index.
However, it said its longer term performance remains strong, with its total return on next asset value at 10.5% over the past three years, compared to a 3.7% return from the benchmark.
It proposed a second quarterly dividend of 3.40 pence, taking its total paid for the first half to 6.80p, up from the 6.60p it paid the previous period.
Standard Life Equity said its decision not to hold Royal Dutch Shell PLC, Glencore PLC and BG Group PLC had been negative as the sector rebounded strong at the beginning of 2016 after a prolonged under-performance in 2015.
Despite this, Standard Life Equity said it remains cautious towards the oil majors, as dividends are not covered by free cash flow, raising questions over the sustainability of their dividend policies.
"The board does not believe that the results achieved in the last six months are indicative of a deterioration in the company's long term prospects. In investment markets, periods of great success, such as we enjoyed in 2015, are very often followed by quieter periods," said Chairman Richard Burns in a statement.
"We continue to have confidence in our manager's proven investment process and well-resourced investment team and, despite all the uncertainties facing investors today, notably the upcoming referendum on the UK's membership of the European Union, I remain confident in our ability to produce good returns for shareholders in the future," Burns added.
Shares in Standard Life Equity Income Trust were up 1.1% at 426.25 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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