The Scottish Investment Trust PLC 1887 - 2012125 years then and now
The Scottish Investment Trust Company Limited was incorporated in Edinburgh on 27 July, 1887.
To put it into historical context, 1887 was the year of Queen Victoria's Golden Jubilee. It was also the year that saw the start of the construction of the Eiffel Tower, the patenting of Herr Daimler's prototype of the modern petrol engine, the first production of Glenfiddich whisky and the invention of the contact lens.
Much of what was core to SIT in those early days remains key today - its raison d'être, its independence and focus, its concentration on international equity investment, its appeal to a diverse range of investors - even the building it operates from. While today SIT embraces the latest technologies to aid its investment research process, in 1887 it was one of a new breed of companies created to enable collective investment by the ordinary man (and woman) in the street in the developing geographical markets and industrial sectors of the day.
SIT's prospectus stated "the object of the Scottish Investment Trust is to apply the principles of co-operation to the investment of money so that investors may, by uniting their means, spread their investment over a wider field, thus obtaining a higher rate of interest with greater security and exemption from liability than if the amount subscribed by each shareholder were independently invested." and the same principle holds true today. The launch of its investment trust savings scheme (STOCKPLAN) in SIT's centenary year, 1987, improved accessibility by providing investors with a simple, cost-effective method of purchasing SIT shares. The scheme was followed by tax-efficient wrappers (PEP then ISA and a SIPP) and a plan which facilitated investing for children (STOCKPLAN: A Flying Start).
In the original list of stockholders were, predictably, professional men - mostly lawyers, stockbrokers, accountants, doctors and church ministers. However, there were also a number of ordinary working people - women as well as men - including a baker, a grocer, a house painter, a school mistress and a butler - and SIT continues to attract a diverse range of investors today.
Like other early investment trusts, SIT was an outward-facing adventurous investment vehicle, investing in the emerging markets of the time, principally the Americas. SIT's first annual report and accounts included such investments as:
Denver and Rio Grande Railroad Company
San Paulo (Brazilian) Railway Company
London and River Plate Bank
Midland Railway of Uruguay
Costa Rica Government Bonds
Havana Railways Company
Monte Video Gas Company Limited
Brazilian Submarine Telegraph Company Limited
Britain was at the height of its days of Empire and this could be seen in other, sometimes rather esoteric sounding, investments:
Indiarubber, Gutta Percha and Telegraph Works Company
Phospho-Guano Company Limited
Luckimpore Tea Company of Assam Limited
Irrawaddy Flotilla Company Limited
While closer to home was investment in:
Glasgow Tramway and Omnibus Company
London and Westminster Bank
Birkenhead Brewery Company Limited
And, some familiar names:
Hong Kong and Shanghai Banking Corporation
Peninsular and Oriental Steam Navigation Company
Standard Life Assurance
Rio Tinto Company Limited
SIT currently holds investments in HSBC, Standard Life and Rio Tinto (although not consecutively since 1887).
In 1889, SIT bought 6 Albyn Place, in Edinburgh's New Town, which, the directors were pleased to note, it acquired at 'a very moderate price' and the company is still run from this building today.
The first board members believed investment at home seldom matched the prospects for economic expansion which existed overseas. By the turn of the 20th century, SIT had placed the majority of its investment overseas and, with the exception of the Second World War (when the Treasury requisitioned virtually all overseas investments to help pay for the war effort) and its immediate aftermath, this has been the position ever since with the focus primarily on equity investment.
Currently, 22% of shareholders' funds are invested in the UK, 33% in North America, 17% in Asia Pacific (ex Japan), 14% in Europe (ex UK), 9% in Latin America, 6% in Japan, and 2% in the Middle East & Africa. 82% of total assets are in equities, well under 1% in fixed income and just under 18% in a mixture of cash and current asset investments (short-term treasury stocks).
On the personnel side, SIT operated with only directors and a secretary until 1925, when it appointed a member of the board, R G Simpson, to be manager as well. That appointment ran until 1934 when the then secretary, R J Edgar, became manager and secretary combined. Edgar was only the third secretary in fifty years, following Holmes Ivory and W H Ivory and there have been just five secretaries since - D C Reid (1937-43), George Smith (1943-51), Albert Black (1951-79), Iain Harding (1979-2007) and Steven Hay (2007 to present). Currently, the manager is assisted by an investment team of eleven along with IT, statistics, company secretarial, investor relations, marketing and administrative staff.
Unlike many other investment trust companies and managers which over the years developed into fund management houses running a variety of investment trusts and other funds such as unit trusts and OEICs, SIT continues as it began, a single-purpose organisation. It is independently managed by its own employees; its independence providing a clear focus and goal.