Schroder BSC Social Impact (SBSI)
25/10/2024
Results analysis from Kepler Trust
Intelligence
Schroder BSC Social Impact
(SBSI) has released its annual results for the year ending
30/06/2024. Over the period, the trust saw its NAV increase by 1.5%
on a total return basis, which compares to an average total return
of 8.1% for the AIC Flexible sector.
The portfolio is categorised
into three asset classes: debt and equity for social enterprise,
high impact housing, and social outcome contracts, plus liquidity
assets for committed capital not yet required. Over the year to
30/06/2024, high impact housing has increased the most to 47%, with
social outcome contracts falling as capital was
returned.
The biggest positive to
performance was investment income, supported by higher rental
income as a result of its inflation-linkage. Whilst there were some
positive valuation gains, these were not enough to offset valuation
write downs, which overall detracted from NAV.
There were new investments
into a renewable energy project, and an affordable homes project.
The trust's capital is now either fully invested or allocated,
though the pipeline remains attractive.
Two-thirds of the portfolio
is now considered mature and the remainder investment. As projects
develop, they are expected to contribute to future valuation gains
and increasing income.
The board announced an
increased dividend of 2.94p per share, equivalent to a 3.6% share
price yield, towards the top end of the improved guidance
range.
Despite the resilient NAV
performance, the discount widened in the year. The board bought
back c. 1.6m shares in the year, and has continued in the period
post results.
Chair Susannah Nicklin
commented on the outlook for impact investing, indicating that the
"long-term effects of the recent economic instability are expected
to continue… [which].. leads to continued and growing demand for
the services that the Company's investments are
offering".
Kepler
View
We believe these results show
the resilience of Schroder BSC Social Impact's (SBSI) portfolio and
asset class. The managers have weathered a challenging economic
period, whilst still delivering positive NAV returns and improving
the trust's income profile. The managers highlight features with
very low correlation to GDP and a growing pipeline as reasons for
optimism.
Over half of the portfolio
involves projects that are inaccessible to new investors, with
further allocations to projects which are not easily available. We
think this contributes to SBSI being a unique proposition for
investors, as does investing in an asset class that benefits from
reliably backed income sources, as well as its strong focus on
impact outcomes.
The dividend outlook for the
trust continues to look strong, in our opinion. This year's
dividend has grown significantly meaning the trust is now at the
top end of its income goal. This goal was increased just last year
which we believe shows the strength of the income picture. We
understand that investment income could continue to strengthen too
adding to the trust's potential.
These positive factors are
not reflected in the trust's current rating in our opinion, as
shown by the wide discount, currently at one of the widest points
in the trust's history. We understand the board is exploring
multiple options for how to rectify this, which we believe this
could present an attractive entry point for long-term investors
whilst also enabling them to invest in a portfolio that has shown
good resilience and has generated differentiated and highly
defensive income.
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.