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Stock Analysis & ValuationSchroder Income Growth Fund plc (SCF.L)

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Previous Close
£355.00
Sector Valuation Confidence Level
High
Valuation methodValue, £Upside, %
Artificial intelligence (AI)157.06-56
Intrinsic value (DCF)248.46-30
Graham-Dodd Method6.02-98
Graham Formula130.49-63

Strategic Investment Analysis

Company Overview

Schroder Income Growth Fund plc (SCF.L) is a UK-based open-ended equity mutual fund managed by Schroder Investment Management Limited. Launched in March 1995, the fund primarily invests in UK public equities across diversified sectors, aiming to deliver income growth alongside capital appreciation. The fund benchmarks its performance against the FTSE All Share Total Return Index, reflecting its focus on the broader UK equity market. As part of the Financial Services sector, specifically within Asset Management - Income, Schroder Income Growth Fund plc caters to investors seeking steady income through dividend-paying stocks. With a market capitalization of approximately £212 million, the fund leverages Schroders' extensive investment expertise to navigate market conditions. Its strategy emphasizes a balanced portfolio of high-quality UK companies, making it a relevant choice for income-focused investors in a low-yield environment.

Investment Summary

Schroder Income Growth Fund plc offers investors exposure to a diversified portfolio of UK equities with a strong focus on income generation. The fund's dividend yield, supported by a dividend per share of 15.7 GBp, is attractive for income-seeking investors. However, its performance is closely tied to the UK equity market, which may introduce volatility, as reflected in its beta of 1.15. The fund's lack of debt and solid net income of £37.3 million in the last fiscal year underscore its financial stability. While the fund benefits from Schroders' reputable management, its reliance on UK markets may limit diversification benefits for global investors. The fund is best suited for those with a long-term horizon and a preference for UK-centric income strategies.

Competitive Analysis

Schroder Income Growth Fund plc competes in the crowded UK income fund market, where its primary advantage lies in its association with Schroders, a well-established asset manager with deep expertise in UK equities. The fund's focus on the FTSE All Share Index provides broad market exposure, but it faces stiff competition from both active and passive income funds. Its competitive positioning is strengthened by a consistent dividend track record and a disciplined investment approach. However, the fund's performance is susceptible to UK economic conditions, including Brexit-related uncertainties and domestic fiscal policies. Unlike global or multi-asset income funds, SCF.L's UK-centric strategy may lack diversification, potentially limiting appeal during periods of UK underperformance. The fund's active management style differentiates it from passive income ETFs but also introduces higher fees, which could deter cost-conscious investors. Overall, its strengths lie in Schroders' brand and a proven income strategy, but it must contend with broader market trends favoring low-cost and globally diversified alternatives.

Major Competitors

  • Merchants Trust plc (MRCH.L): Merchants Trust plc is a UK-focused income fund with a long history of dividend growth. It offers a higher dividend yield compared to SCF.L but carries greater concentration risk due to its top-heavy portfolio. Its performance is similarly tied to UK equities, making it a direct competitor for income-seeking investors.
  • City of London Investment Trust plc (CTY.L): City of London Investment Trust plc is another UK income fund with a strong dividend track record. It boasts lower fees and a more conservative portfolio compared to SCF.L, appealing to risk-averse investors. However, its growth potential may be limited by its defensive positioning.
  • Standard Life Investments Property Income Trust Ltd (SLI.L): This trust focuses on UK property income, offering an alternative to equity-based income funds like SCF.L. While it provides diversification into real estate, it is more sensitive to property market cycles and interest rate changes, presenting different risk-return dynamics.
  • JPMorgan American Investment Trust plc (JAM.L): Though primarily focused on US equities, JPMorgan American Investment Trust competes for income investors seeking geographic diversification. Its US exposure provides a hedge against UK market risks but may not appeal to those specifically targeting UK income.
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