Scottish American Investment Company: May 2026 update

• The managers hunt around the globe for companies with long term growth prospects and resilient dividends

• The managers are supported by a well-resourced and diverse team at Baillie Gifford

• The trust has a proven track record of year-on-year dividend growth, having increased its pay-out for 52 consecutive years

How it fits in a portfolio

Founded in 1873, Scottish American Investment Company (SAINTS) is one of the oldest investment trusts around. The managers search globally for companies with the potential for long term growth and a reliable dividend that could grow into the future. The aim is to grow income and capital by primarily investing in company shares, but the trust also invests in other assets such as property, infrastructure, and bonds. Given the focus on growth, it could work well alongside ‘value’ funds or investment trusts that invest in unloved companies. It could also provide global exposure in an income-focused investment portfolio.

Investors in investment trusts should be aware the trust can trade at a discount or premium to net asset value (NAV).

Manager

James Dow is the trust’s lead manager. He was appointed deputy manager in 2016 before becoming lead manager in 2017. Dow has spent his entire investment career at Baillie Gifford after joining on the graduate scheme. Prior to his current role, Dow spent time analysing US companies.

Ross Mathison has served as the trust’s deputy manager since 2023. Mathison joined Baillie Gifford in 2019 having previously worked at Aviva and Standard Life, where he covered European and global equities.

Previous manager Toby Ross stepped back from the trust in 2024 to focus on other responsibilities at Baillie Gifford.

The managers are supported by a team of five analysts and a dedicated Environment, Social, and Governance (ESG) analyst, while also benefiting from the wider resource available at Baillie Gifford, which consists of over 100 investment professionals.

Dow and Mathison manage other funds that invest in a similar way. Given the overlap in their process and approach, we think they can comfortably handle these responsibilities.

Process

SAINTS has a dual purpose it aims to deliver for shareholders – a dependable income stream growing faster than inflation and long-term capital growth. The managers look for companies that can demonstrate resilience through the economic cycle and whose shares might provide some shelter during market turbulence. This leads them to be selective and they only invest in companies they consider to be exceptional.

To identify opportunities, they look at individual company prospects using a combination of quantitative and qualitative factors. Each company must pass their nine-question framework which focuses on understanding the drivers of growth and the reliability of dividends. Meeting with company management is a crucial part of this process and it allows the team to gauge the attitude towards paying a dividend to shareholders. If a company cuts its dividend, the managers review the investment, but this doesn’t necessarily mean it will be sold. Each company is assessed on a case-by-case basis and the managers acknowledge that dividend cuts can be prudent for long-term growth, such as to fund the acquisition of another business.

The trust invests in between 50-100 companies, although tends to be towards the lower end of that range. These companies are split into four areas based on different drivers of free cash flow - cash available to the business after expenses have been paid.

‘Everyday royalties’ form the bedrock of the trust and consists of quality companies with strong balance sheets, barriers to entry from competition, and experienced management teams. It includes companies like Nestlé, Procter & Gamble, and McDonald’s. The managers also look for ‘market expanders’. These companies tend to be market leaders with the ability to raise prices without affecting demand and can offer the potential for quicker growth through continued innovation. The remaining areas focus on longer-term free cash flow growth and include companies with a catalyst for positive change. Companies that possess these qualities can be hard to find, but by investing globally the managers give themselves the best opportunity to seek them out.

The managers make use of their global remit by investing across different regions. The largest investments are in developed markets like the US and Europe, which at the end of April 2026 accounted for 39.0% and 30.2% respectively. The managers also invest in higher risk emerging markets.

The trust has further diversification through investing in a portfolio of UK commercial property, which is managed by OLIM Property Limited. At 30 April 2026, 9.2% of the trust was invested in property. The managers also invest in some bonds, which includes riskier high yield and emerging market bonds.

The managers invest for the long term, so changes to the trust don’t happen too often. Over the past year, an investment was made in Alphabet after the company initiated a dividend policy. The managers also see further adoption of AI as a key driver of the company’s future growth. The trust also made investments in financial data provider MSCI and Taiwanese technology business MediaTek.

The managers can use gearing (borrowing to invest) in managing the trust. This is done with the intention of increasing returns, but it could also magnify losses in a falling market and so is a higher risk approach. Gearing at the end of 2025 was 11%, an increase from 10% at the end of the trust’s previous financial year. The managers can also use derivatives, which add risk.

Culture

The Scottish American Investment Company is managed by Baillie Gifford, an independent private partnership founded in 1908. It’s owned by partners who work full time at the firm. This ownership structure means senior managers have a vested interest in the company, its funds, and investment trusts performing well. We think this has helped cultivate a culture with a long-term focus, where investors' interests are at the centre of decision making. We also like that managers are incentivised in a way that aligns their interests with those of long-term investors and should help retain talented managers.

ESG Integration

All of Baillie Gifford’s funds are run with a long-term investment horizon in mind. The firm’s fund managers see themselves as long-term owners of a business, not short-term renters. So, assessing whether society will support, or at the very least, tolerate, the business model over the long term, and whether management will act as good stewards of shareholders’ capital is an important part of the investment process.

Dedicated ESG (environmental, social, and governance) analysts sit with and report into both their respective investment teams, and the central ESG function. The firm’s ESG efforts are supported by a dedicated Climate team and an ESG Core team (responsible for voting operations, ESG data, and ESG-related client communications). Individual investment teams are responsible for voting decisions and engagement for the companies they invest in. Investment in controversial weapons and cannabis is prohibited across the firm.

The firm reports all its voting decisions and provides rationale in situations where it votes against management or abstains, in a detailed quarterly voting report. There is also a quarterly engagement report which details the companies engaged with, and the topics discussed, and further engagement case studies are available on the website. All this information is brought together in the firm’s annual Investment Stewardship Activities report.

Baillie Gifford courted controversy in 2024 when it left the Net Zero Asset Managers’ Initiative, a group of asset managers that have committed to achieving net zero carbon emissions by 2050, and the Climate Action 100+ collaborative engagement scheme. It claimed membership of the organisations "has become contested", adding that it "risks distracting from our core responsibilities". We view this as a disappointing backward step but are encouraged that the group's net zero and engagement-related commitments remain unchanged.

While ESG matters are considered as part of the investment process, this trust doesn’t have a sustainable mandate.

Cost

The net ongoing annual charge in 2025 was 0.60%, an increase from the 0.58% charge in 2024. Investors should refer to the latest annual reports and accounts, and Key Information Document for details of the risks and charging structure.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes.

The annual charge to hold investment trusts in the HL ISA, SIPP, or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold investment trusts within the HL Junior ISA. As investment trusts trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

Performance

Since Dow became lead manager in 2017, the trust has returned 89.08%*. This is ahead of peers, with the average trust in the AIC Global Equity Income sector returning 56.24%. Over the same period, the trust’s NAV rose 118.21%. Past performance isn’t a guide to the future.

Over the trust’s last financial year, to the end of December 2025, returns of 6.69% were ahead of the peer group’s 4.69% average but trailed the trust’s benchmark. The trust’s NAV grew 2.36% during the year.

The best performing areas of the trust were the portfolio of bonds and the trust’s infrastructure investments. The equities portfolio, which is the majority of the trust’s assets, was the weakest performing area.

Investments that detracted from performance over the year include Novo Nordisk. The Danish pharmaceutical business has been under pressure from competitors in the market for weight-loss medicines. French financial services company Edenred also detracted after being affected by regulatory changes. The managers maintain conviction in both companies.

Reflecting the global nature of the trust, investments contributing to performance over the year include Taiwanese technology giant TSMC, Brazilian stock exchange B3, and Swiss pharmaceutical company Roche.

The total dividend per share for the year to December 2025 was 15.92p, a 7% increase on the previous year. The trust has increased its dividend for 52 consecutive years and is an AIC ‘Dividend Hero’. The trust currently has a dividend yield of 2.94%, although yields are variable and aren’t a reliable indicator of future income.

At the time of writing the trust trades on a 7.7% discount to NAV, which is lower than the 12-month average of 9.34%.