Schroders Plc · LSE:SDR
Schroders — Schroder Income Growth Fund — FY2024 Earnings Presentation
39 slides from Schroders's earnings presentation, Nov 27, 2024
Slide 1: Schroder Income Growth Fund plc Annual Results to August 2024
Schroder Income Growth Fund plc Annual Results to 31 August 2024 Sue Noffke 27 November 2024 Matt Bennison Head of UK Equities Marketing material UK Equity Fund Manager
Slide 2: Schroder Income Growth Fund plc
Schroder Income Growth Fund plc Growing capital Growing income Experienced team ahead of inflation employing a bottom- up approach Past performance is not a guide to future performance and may not be repeated. There is no guarantee aims will be achieved. Source: Schroders. 2
Slide 3: Managing the trust since 2011
Managing the trust since 2011 Sue Noffke Head of UK Equities Matt Bennison Fund Manager 3 Source: Schroders.
Slide 4: Key performance indicators - capital
Key performance indicators - capital For the year ended 31 August 2024 NAV/Share Share Price Relative* Relative* 19.0% +2.0% 17.7% +0.7% Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and inve
Slide 5: Key performance indicators - income
Key performance indicators - income For the year ended 31 August 2024 Dividend Dividend Growth 14.20p +2.9% Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the am
Slide 6: Objective to grow income ahead of inflation
Objective to grow income ahead of inflation1 Periods to 31 August 2024 1 year 5 years 10 years Dividend increase 2.9% 14.5% 40.6% Inflation 2.2% 23.9% 34.0% Objective achieved Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from
Slide 7: Long term outperformance - capital
Long term outperformance - capital Since Sue Noffke took over management in July 2011* Net Asset Share FTSE All Value Price Share 174% Relative 167% Relative 138% +36% +29% Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from the
Slide 8: Long term performance - income
Long term performance - income Dividends per share (pence) 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 Real dividend growth of 1.8% p.a. throughout multiple market cycles 2024 dividend is 69% greater than if it had just kept pace with inflation1 Past Performance is not a guide to future performance and ma
Slide 9: 2024 Earnings per Share and Dividend per Share
2024 Earnings per Share and Dividend per Share Dividend increased in 2024 by drawing on revenue reserves Pence per share 4 2.56p 14.20p 2 13.14p 13.80p 0 11.64p 8.25p 4 2 0 Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from the
Slide 10: 2024 Earnings Per Share declined 11.5%
2024 Earnings Per Share declined 11.5% 1. Structural headwinds Share buybacks Capital allocation shift towards share buybacks from dividend payments by portfolio companies FY 2024 FY 2023 Number of portfolio companies 29 17 % of portfolio companies 60% 38% 2. Cyclical headwinds Mining sector Lower e
Slide 11: Schroder Income Growth plc Dividend Cover
Schroder Income Growth plc Dividend Cover Retained revenue into reserves in good times, used revenue reserves in tougher times to maintain dividend growth to shareholders 1.2 Capital Allocation Shift Global Financial Crisis Dividend covered Covid Pandemic 1.1 1.0 0.9 Dividend uncovered 0.8 Past Perf
Slide 12: Judicious use of revenue reserves to smooth dividend increases
Judicious use of revenue reserves to smooth dividend increases to shareholders, a key benefit of Investment Trust structure Retained revenue and dividends per share (pence) 15 14 13 12 Trust has 58% of 2024 11 dividend covered by 10 9 revenue reserves 8 (8.25p) equivalent to 7 7 months 6 5 4 3 2 1 0
Slide 13: Performance – 12 months to 31 August 2024
Performance – 12 months to 31 August 2024 Examples of largest contributors Examples Gearing Average 13.5% Small and mid-caps Intermediate Stock selection in financial sectors Capital Group Stock selection in consumer staples Underweight No exposure to Underweight and selection in energy sector Under
Slide 14: Performance – 12 months to 31 August 2024
Performance – 12 months to 31 August 2024 Examples of largest detractors Examples Stock selection in consumer discretionary sector Stock selection in industrials No exposure to Rolls Royce China exposed portfolio holdings Past Performance is not a guide to future performance and may not be repeated.
Slide 15: Portfolio activity – 12 months to 31 August 2024
Portfolio activity – 12 months to 31 August 2024 NEW POSITIONS SOLD POSITIONS ADDITIONS TO EXISTING POSITIONS REDUCTIONS TO EXISTING POSITIONS Shell The stocks shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. Logos are the property of the c
Slide 16: Summary for the year ended 31 August 2024
Summary for the year ended 31 August 2024 Grown Capital, Grown Income NAV/Share Share Dividend Price Growth 19.0% 17.7% +2.9% Relative1 Relative1 Relative2 +2.0% +0.7% +0.7% Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from th
Slide 17: Outlook
Questions
Slide 18: Outlook
Outlook
Slide 19: Questions on a fund manager’s mind in 2024/25
Questions on a fund manager’s mind in 2024/25 Geo-political, de- Central Bank Policy Soft vs Hard landing globalisation and supply and Bond Yields security, tariffs Valuations Political change / policies Climate change markets, stocks M&A Market rotation Inflation Activism Value vs growth Source: Sc
Slide 20: UK remains a reasonable hunting ground for income seekers
UK remains a reasonable hunting ground for income seekers Dividend yield from key markets (%) Other assets (%) 5.0 4.0 3.0 2.0 1.0 0.0 MSCI USA MSCI Japan MSCI EM MSCI Europe ex UK FTSE All Share 10 year UK gilts Instant access savings Past performance is not a guide to future performance and may no
Slide 21: UK dividend cover is healthiest for over 10 years
UK dividend cover is healthiest for over 10 years Estimates 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024e 2025e FTSE All-Share 2x cover threshold (healthy) Past performance is not a guide to future performance and may not be repeated. Source: Bloom
Slide 22: Composition of UK shareholder yield
Composition of UK shareholder yield Shareholder returns significantly bolstered by share buybacks 7% 6% 5% 2% 4% 3% 2% 4% 1% 0% Dividends Buybacks Shareholder yield composition is illustrative. Past performance is not a guide to future performance and may not be repeated. Source: As at September 202
Slide 23: UK is attractive on a total shareholder yield basis
UK is attractive on a total shareholder yield return basis versus other major markets 6.0% Dividends Gross buybacks 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FTSE 100 FTSE 250 STOXX 600 S&P 500 Past performance is not a guide to future performance and may not be repeated. Source: LSEG Datastream, Factset, Goldm
Slide 24: UK equity market performance
UK equity market performance Long-term outperformance of mid-sized companies c200% over 30 years Large-cap v Mid-cap company performance 1200 Mid, 965% 1000 +201% outperformance 800 600 400 Large, 764% 200 0 1994 1999 2004 2009 2014 2019 2024 Past performance is not a guide to future performance and
Slide 25: UK equity market performance
UK equity market performance But 26% relative underperformance over the last 3 years Large-cap v Mid-cap company performance 140 Large, 28.9% 130 120 -26% 110 underperformance 100 90 Mid, 2.6% 80 70 2021 2022 2023 Past performance is not a guide to future performance and may not be repeated. Source:
Slide 26: Size analysis: market capitalisation weights
Size analysis: market capitalisation weights FTSE All-Share Index Schroder Income Growth Fund plc 16% 27% Trust is 11% overweight small & mid-sized companies 84% 73% Positioning shown is for illustrative purposes and are not a recommendation to buy or sell. Source: Schroders, Aladdin. As at 31 Augus
Slide 27: FTSE 250 vs FTSE 100 relative dividend yield
FTSE 250 vs FTSE 100 relative dividend yield Creating significant income opportunities in attractively valued mid cap companies 1.4 1.3 Global Financial Crisis 1.2 1.1 1.0 Brexit 0.9 0.8 0.7 0.6 Dot com bubble 0.5 0.4 Past performance is not a guide to future performance and may not be repeated. Sou
Slide 28: Stock positioning
Stock positioning Top 10 holdings at 31 August 2024 2.9 7.1 3.0 3.1 3.1 41.6% of 6.3 portfolio Shell 3.4 4.7 3.8 4.6 For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Source: Schroders, Aladdin, for Schroder Income Growth Fund investment portfolio, as at 31
Slide 29: Positioning at 31 August 2024
Positioning at 31 August 2024 Overweight the index Intermediate Capital Group +3.3% +2.2% +2.2% +2.1% +2.1% Underweight the index British American Tobacco -3.0% -2.3% -2.2% -2.1% -2.1% For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Logos are the property
Slide 30: Portfolio activity since year end
Portfolio activity trust since year end 2 months activity to 31 October 2024 NEW POSITIONS SOLD POSITIONS ADDITIONS TO EXISTING POSITIONS REDUCTIONS TO EXISTING POSITIONS The stocks shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. Logos are
Slide 31: Positioning at 31 October 2024
Positioning at 31 October 2024 Overweight the index +3.0% +2.7% +2.2% +2.2% +2.2% Underweight the index British American Tobacco -2.6% -2.3% -2.3% -2.3% -2.2% For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Logos are the property of the companies shown. So
Slide 32: Sector positioning
Sector positioning Sectors shown are for illustrative purposes and are not a recommendation to buy or sell. Source: Schroders as at 31 August 2024. 32
Slide 33: Sector positioning
Sector positioning Active weight relative to FTSE All Share Index 4.2% Utilities Overweight 3.8% Consumer Discretionary 3.1% Health Care 1.7% Financials 1.3% Real Estate 1.2% Telecommunications 1.0% Basic Materials Technology -0.3% Technology Energy -3.9% Energy Industrials -4.5% Industrials Consume
Slide 34: Holdings in the trust growing their dividends
Holdings in the trust growing their dividends >15% growth High single digit % growth >5% growth For illustrative purposes only and should not be viewed as a recommendation to buy or sell. Logos are the property of the companies shown. 34
Slide 35: Performance – discrete calendar year periods
Performance – discrete calendar year periods Schroder Income Growth Fund plc Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Perf
Slide 36: Risk considerations
Risk considerations Schroder Income Growth Fund plc Concentration risk. The Company may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the Company, both up or down. Counterparty risk
Slide 37: Market data disclaimers
Market data disclaimers MSCI index: Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is inte
Slide 38: Important information
Important information The material is not intended to provide, and should not be relied on for accounting, legal or tax advice. Reliance should not be placed on any views or information in the material when taking individual investment and/or strategic decisions. Any references to securities, sector
Slide 39: Important information
Important information Marketing material • Any reference to regions/ countries/ sectors/ stocks/ securities is for illustrative purposes only and not a recommendation to buy or sell any financial instruments or adopt a specific investment strategy. • The material is not intended to provide, and shou
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