The performance of the £280m Standard Life Equity Income investment trust was dragged lower in the six months to the end of March 2018 by the underperformance of holdings in the technology sector.
According to the half-year results statement released this morning (24 May) and covering the six months to 31 March 2018, the trust lost 4.3 per cent in the period compared with a loss of 2.3 per cent for the FTSE All Share Index in the same time.
Tom Moore, who runs the fund, said the market underperformed during the six months as investors began to fear the consequences of a trade war between the US and China happening at the same time as interest rates are rising.
He also blamed the underperformance of his fund on investments in software business Micro Focus, which issued a profit warning. The shares of the company dropped from £18.80 to £9.91 on March 20, and were over £20 a year ago. The shares are now over £13.
But Mr Moore said he continues to believe in Micro Focus’s business model and financial health.
His investment in another software business, Sage, also dragged on performance as the company issued a profit warning.
Mr Moore said: “ We believe that Saga's gradual diversification of revenues away from insurance and towards travel will harness its strong brand by cross-selling products to existing customers.
"This diversification will ultimately drive up the valuation of the stock, as it will make the business more resilient to sudden changes in conditions in its core insurance market.”
The Standard Life Equity Income investment trust has returned 66 per cent over the past five years, compared with 46 per cent for the average trust in the AIC UK Equity Income sector in the same time period.
David.Thorpe@ft.com
