The Scottish Mortgage Investment Trust has seen a 24 per cent fall in its earnings per share, as more companies are reducing the cash paid out to shareholders.
In the £3bn trust’s interim report for the six months to the end of September, it says earnings per share for the period were 1.23p compared to 1.62p for the same period last year.
“The fall is due to the large number of companies in the portfolio, particularly in the US, which are reinvesting in their own businesses’ future growth rather than paying cash out to shareholders,” says the report.
“Whilst this ought to be beneficial for future capital growth and is entirely consistent with Scottish Mortgage’s own growth focus, it does affect the earnings level in the portfolio.”
The board has decided to maintain the current dividend of 1.38p per share, in recognition of how important dividends are to some shareholders, but future increases appear likely to be limited.
This year’s final dividend, paid in July, was 1.55p per share.
Elsewhere in the portfolio, the managers have increased their allocation to unlisted equities, which now account for 10 per cent of the portfolio.
The most recent additions to the unlisted section of the portfolio are US analytics company Palantir and the Indian ecommerce firm Flipkart.
Other holdings include music site Spotify, house sharing website Airbnb, peer-to-peer lending firm Funding Circle and tradesmen’s services Thumbtack.
This unlisted allocation is expected to increase, because the “managers believe this trend in the corporate funding markets is likely to continue”.
“It is worth emphasising, however, that the increase in the number of holdings in unlisted companies within the portfolio reflects the wider shift in corporate financing markets and does not represent a change in the investment approach taken by the managers,” the report adds.
The trust is also investing in “established” names int he unlisted sector, the board says, which are valued at $1bn or more.
Over six months the investment trust has only delivered marginally more than the FTSE All World Index.
The net asset value per share dropped by 10.9 per cent in the past six months, while the share price fell by 9.7 per cent. The FTSE All World fell by 11.8 per cent.
However, the board says it does not believe six months is a long enough period over which to judge the fund.