Baillie Gifford’s SAINTS fund tops £1bn assets

Baillie Gifford

Baillie Gifford investment trust Scottish American Investment Company (SAINTS) saw its assets top £1 billion at the end of the year to December 31, 2021, as it achieved Net Asset Value (NAV) total return for the year of 21.5% compared to the total return from global equities of 20%.

“The share price total return was 19.5%,” said SAINTS.

“Returns were assisted by the resilient operational performance of many of the companies in which SAINTS invests, and also by a strong return from the company’s property investments.”

The biggest investments of SAINTS at December 31 included £31 million in United Parcel Service (UPS), £30 million in Microsoft, £29 million in Novo Nordisk, £29 million in Taiwan Semiconductor Manufacturing, £29 million in Fastenal, £28 million in Sonic Healthcare and £26 million in Procter & Gamble.

SAINTS said it remains the best performing fund in its global equity income peer group in terms of NAV total return over the past five years.

SAINTS said its full year dividend is 12.675p per share.

This is 5.6% higher than the 2020 dividend, extending the company’s record of dividend increases to forty eight consecutive years.

SAINTS managers James Dow and Toby Ross wrote: “The global economic recovery was in full swing throughout the year, leading to growing bottle-necks in supply chains as companies struggled to respond to a recovery in consumer demand.

“Stock markets in the US and Europe performed more strongly than those in Asia and Emerging Markets over the course of the year, which partly reflects the recovery in economic confidence in the West, and partly the struggles that some developing countries have had with managing successive waves of the pandemic.

“However, our performance continued to be driven by the idiosyncratic opportunities at our companies, whether that is insulin maker Novo Nordisk’s success in developing novel treatments for obesity, or Silicon Motion’s success in taking share in the controllers for flash memory storage in the semiconductor industry.

“In other words, it’s been the success of individual companies’ management teams in executing on their opportunities rather than clever top-down calls that have delivered solid returns over the year — which tends to be how we like it …

“The majority of our holdings posted healthy dividend growth, as they gained confidence in the robustness of their businesses.

“In addition, readers may remember that a handful of our holdings reduced dividends in 2020, and most of these rebounded in 2021.

“On top of these factors, holdings such as Rio Tinto, T. Rowe Price and Admiral delivered not just strong dividend growth but paid large special dividends.

“Set against that, the strength of sterling against currencies like the US dollar and euro was a headwind to income growth.

“There is, though, another factor which affected our dividend growth, which is less visible from the outside.

“Our strong belief is that income investors will get the best results if they focus on long-term income, not short-term yield.

“By this, we mean that we would rather invest in a company where we have real confidence that the dividend will be resilient and the growth strong over five or ten years, than take a chance with a company with a high near-term yield, but where we believe there are serious doubts over either the growth or the sustainability of that income stream.

“Some people call our approach ‘quality’, but we tend to think of it more as another dimension of being ‘long-term’ …”