Following the Morningstar Analyst Ratings Meeting on 11th December 2014, we have downgraded the Securities Trust of Scotland (STS) to a Morningstar Analyst Rating™ of Neutral. The fund’s rating was previously Under Review following Martin Currie’s acquisition by Legg Mason. While we think the acquisition itself should bring stability to the firm, our conviction in the fund has decreased. Since Alan Porter’s appointment, stock selection has not added alpha in a consistent way and the manager has done little to differentiate the fund in an increasingly competitive Global Equity Income peer group. Although its expenses still compare favourably with its peers’, the cost advantage will likely add less value over time in a post-RDR world. We thus believe a Neutral rating is a more appropriate reflection of our conviction.
Find out more about how Morningstar analysts rate funds and investment trusts here.
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