Understanding the STS Global Income & Growth Fund
No fund that invests in equities is immune to stock market shocks. However, some are specifically designed to withstand corrections better than others, especially those managed with a focus on capital preservation. Among these conservative equity funds is STS Global Income & Growth, managed by Troy Asset Management, a boutique asset manager known for its balanced approach to protecting and growing investors’ capital.
STS Global, a stock market-listed investment trust, has a market value of £281 million. It is managed by James Harries and Tomasz Boniek, part of a 13-strong team overseeing approximately £11 billion in assets. Troy took control of the fund nearly five years ago and further boosted its assets about 18 months ago by merging it with another trust, Troy Income.
Harries explains the fund’s objective: “Our goal is to deliver investors a growing income stream from a diversified portfolio of international equities. We do this without taking big risks with investors’ capital, although the aim is long-term, steady capital growth.” This approach appeals to investors whose capital is irreplaceable.
So far, Troy has delivered on both fronts. In the four full financial years since managing the trust, the annual income per share has grown from 5.88p to 8.37p, representing a 42% increase. The trust’s shares are currently priced at around £2.40.
In the current financial year, which ends in March 2026, the first quarterly dividend of 2.1p compares to an equivalent payment of 1.586p from the previous year. This suggests that the trust is on track to produce another year of dividend growth.
Harries adds, “We want to keep growing the dividend payments to shareholders. We need to protect investors from persistent inflation. While we aim for the underlying investments to provide this dividend growth, we will top up payments from the trust’s reserves if necessary.”
Currently, the trust holds the equivalent of half a year’s dividends in reserve, which can be used at any time to supplement income from its equity holdings. In terms of overall returns, they have been steady—7.8%, 20.8%, and 44.6% over the past one, three, and five years respectively. These figures are lower than the average global equity income trust (7.9%, 44.3%, and 66.3%), but this is not unexpected given Troy’s safety-first approach.
Harries is concerned about the current market environment, which includes heightened global tensions, volatile bond markets, and the threat of recession. He also worries that the current euphoria surrounding artificial intelligence (AI) may not be sustainable.
As a result, the STS portfolio, consisting of 32 stocks, is very consumer-centric and AI light. A third of the assets are in consumer staples companies, such as British American Tobacco and Reckitt Benckiser, owner of household brands like Dettol, Harpic, and Nurofen. The hope is that if markets correct and a recession follows, these companies (and their share prices) will demonstrate resilience and quality.
Recently, stakes in drinks manufacturer Diageo and Canadian rail freight specialist CNR have been added, along with a new position in US food distributor Sysco. The only ‘magnificent seven’ holding is in Microsoft.
The annual charges total 0.8%, and the shares trade at a small discount, indicating investor demand for a cautious investment vehicle. The stock market ticker for the fund is STS, with an ID code of B09G3N2.
