STS Global Income & Growth Trust Reports Challenging Year with Strategic Focus on Long-Term Value

STS Global Income & Growth Trust has had a rough year on performance, and the Board is not trying to dress that up. The share price total return was negative 2.5% and the net asset value, or NAV, total return was negative 4.6%, compared with a 13.5% return from the Lipper Global – Equity Global Income Index. That is a big miss.

But this was not a full-blown horror show. Income kept growing, costs came down sharply, and the trust’s discount control mechanism kept the shares trading close to asset value when plenty of investment trusts have seen discounts blow out. So the real story here is simple – poor investment performance, but some decent shareholder-friendly housekeeping around it.

STS Global Income & Growth Trust annual results 2026 key numbers investors need to know

Metric	2026	2025
Share price total return	(2.5)%	Not disclosed in this announcement
NAV total return	(4.6)%	Not disclosed in this announcement
Benchmark return	13.5%	Not disclosed in this announcement
Total dividend per share	8.452p	8.368p
Dividend yield	3.8%	Not disclosed in this announcement
Ongoing charges ratio	0.66%	0.80%
Net assets	£254.4 million	£294.5 million
NAV per share	223.18p	243.10p
Shares bought back	7.8 million	19.4 million
Buyback cost	£18.7 million	£43.9 million

STS Global Income & Growth Trust underperformance was the main problem in 2026

The obvious negative is the scale of the underperformance. If you owned this trust for global equity income exposure, you were behind the benchmark by a long way. The Board openly calls that “disappointing”, which is fair.

The managers’ explanation is that markets have rewarded areas they do not like owning – energy, utilities, materials and businesses linked to the artificial intelligence capex boom. Capex means capital expenditure, basically heavy spending on infrastructure and equipment. STS prefers high-quality, cash-generative companies with strong returns on capital, and many of those have been out of favour.

That explanation is plausible, but investors should be honest about what it means. This is a style issue, not just a stock-picking wobble. If the market keeps favouring cyclical sectors and AI-linked winners, STS could stay out of step for a while yet.

STS Global Income & Growth Trust dividend growth and yield still offer some support

The better news is on income. The Board has declared a fourth quarterly dividend of 2.152p, taking the full-year total to 8.452p per share. That is up 1.0% on last year’s 8.368p and gives a 3.8% yield based on the 224p closing share price.

For income investors, that steady quarterly payout matters. It will be paid on 3 July 2026 to shareholders on the register on 5 June 2026. The trust also points out that the dividend is up 48.3% since it was rebased in 2021.

There is an important detail here though. The Board says part of the distribution is funded from capital, which is allowed for an investment trust. In plain English, that means the dividend is not covered fully by portfolio income alone. Revenue return per share was 6.49p, below the 8.452p total dividend, so some of the payout is effectively supported by capital reserves.

Lower fees are a genuine positive in the STS Global Income & Growth Trust results

This is one area where the Board deserves real credit. The ongoing charges ratio fell from 0.80% to 0.66%, an 18% reduction. In a world where returns were weak, cutting costs is one of the few levers the Board can actually pull, and it has done that.

The improvement came from moving the management fee to a flat 0.40% of net assets, negotiating a lower registrar fee, and pushing suppliers harder on contracts. Lower charges do not fix performance, but they do improve what shareholders keep over time. That matters more than it often gets credit for.

STS Global Income & Growth Trust buybacks and discount control protected shareholders better than many peers

Another solid point in this update is the discount control mechanism. Investment trust shares can trade at a discount or premium to NAV, and that can be painful if it widens. STS bought back 7.8 million shares at a total cost of £18.7 million at an average discount of 1.2%, and issued 0.6 million shares for net proceeds of £1.5 million at an average premium of 0.9%.

That is actually quite useful for retail investors. It means liquidity was available close to NAV, rather than shareholders being trapped in a deep discount. In a sector where plenty of trusts have had messy discount problems, this is a competitive strength.

Portfolio winners, losers and new holdings show where the pressure came from

The top contributors were British American Tobacco, Rentokil, Novartis, CME Group and Admiral Group. British American Tobacco was the standout, up 46%, while Novartis returned 26%.

The weakest names were Paychex, Amadeus IT Group, ADP, Relx and Novo Nordisk. The managers argue that, apart from Novo Nordisk, most of the weakness came from fears over AI disruption rather than any deterioration in the underlying businesses.

They also added four new investments during the year – Nike, Sysco, IG Group and Novo Nordisk. That gives you a flavour of the strategy. This is not a trust chasing the hottest themes. It is trying to buy established businesses when sentiment is weak.

Balance sheet, gearing and net assets in the STS Global Income & Growth Trust report

Net assets fell to £254.4 million from £294.5 million, and NAV per share dropped to 223.18p from 243.10p. Investments held at fair value fell to £265.6 million from £308.0 million. So there is no getting away from the fact that shareholders are sitting on a smaller asset base than a year ago.

The trust also had £15.1 million drawn under its revolving credit facility at year end, against a £20 million facility with a £5 million accordion option. Gearing, which means borrowing to invest, can boost returns in good times but hurt in weaker markets. The facility expires in September 2026, and the Board plans to renew it on broadly equivalent terms.

What the managers are betting on next for STS Global Income & Growth Trust

The managers are clearly making a big call that the current market leadership is unsustainable. They argue that AI infrastructure spending looks excessive, that quality software businesses are being misjudged, and that valuation gaps are unusually wide.

They say the portfolio now offers a free cash flow yield of 5.9% versus 4.0% for the MSCI World Index, with return on equity of 30.3% versus 15.8%. Free cash flow yield is a rough measure of how much cash a business generates relative to its valuation. If those numbers hold up, the portfolio does look attractively valued on their own analysis.

The catch is timing. Being early can feel exactly the same as being wrong for a while. That is the key risk for investors sticking with the trust today.

My take on the STS Global Income & Growth Trust 2026 annual results

This is a mixed update, but the performance side clearly dominates. A negative return in a year when the benchmark made 13.5% is poor, full stop. If you want a trust that hugs market leadership, this is not it.

That said, there are still reasons existing holders may stay patient. The dividend is rising, charges are lower, buybacks have been sensible, and the Board sounds engaged rather than complacent. For long-term income investors who believe quality businesses will come back into fashion, STS still has a case.

So the result matters for two reasons. First, it shows the trust is in a difficult patch and needs its investment style to recover. Second, it shows the Board is at least doing the sensible things around the edges while shareholders wait. That does not erase the underperformance, but it does make it easier to tolerate.