STS Global Income & Growth Trust: February 2026 investment trust update

• James Harries is a highly experienced income fund manager with a long track record

• Protecting investors’ wealth during market uncertainty is the focus of Troy’s investment approach

• The trust’s dividend has grown each year during the current managers’ tenure

How it fits in a portfolio

The STS Global Income & Growth Trust aims to deliver long-term income and capital growth. The fund manager looks to grow the income consistently over time rather than seeking higher but potentially unreliable dividend yields and focuses on high-quality companies. He believes investing for income globally is optimal as it provides a broader hunting ground than one country or region.

Given its focus on quality, this trust could work well alongside investments in out-of-favour companies with recovery potential – also known as ‘value’ investing. It could also complement those targeting greater growth that don’t tend to pay dividends. Its global reach may also add diversification to an income-focused portfolio.

Investors in closed-ended funds should be aware trusts can trade at a discount or premium to their net asset value (NAV).

Manager

Troy Asset Management was appointed as the investment manager for the STS Global Income & Growth trust in November 2020, with fund manager James Harries taking the lead. He joined Troy in 2016 from Newton, a subsidiary of BNY Mellon, where he began managing global income funds in 2005. Harries is an experienced global income manager and one we hold in high regard.

Harries is supported by co-manager Tomasz Boniek. He joined Troy from Susa Fund Management in 2017 and holds an MBA from the London Business School.

Harries and Boniek also manage the Troy Trojan Global Income fund, an open-ended fund that invests in a similar way to this trust. It currently features on our Wealth Shortlist of funds selected by our analysts for their long-term performance potential. They also manage the Troy Trojan Ethical Global Income fund. Given the cross-over between the three portfolios, we believe Harries is comfortably able to manage his responsibilities.

Process

Harries’ approach has all the hallmarks of a Troy fund – a focus on financially sound companies that have shown their resilience in both good and bad economic conditions. He has scope to invest anywhere in the world but tends to favour developed markets, such as the US, UK, and Europe. Although he can invest in higher-risk emerging markets, he tends to avoid them and instead prefers companies that sometimes sell their products in these regions.

The team pay close attention to free cash flow, a key measure of dividend predictability. It shows what cash a business has left over from running operations that can then be used for other purposes like paying a dividend, buying back shares, or reducing debt obligations. A company that generates healthy levels of free cash flow will, in theory, be able to sustain, or even increase, how much it returns to shareholders.

Every company in the trust must pay a dividend, but the trust doesn’t have an income target. Harries is more focused on total return, a combination of income and growth, than income alone and won’t chase an unsustainable dividend yield that is potentially damaging to a company’s long-term prospects. Harries also has a strict approach to company valuations and won’t pay more for a company’s shares than he believes they’re worth, regardless of the potential for future growth.

The trust consists of between 30-50 companies, although tends to be near the bottom of that range. This concentrated approach means each company can have a significant impact on performance and so it’s a higher-risk strategy. Geographically, 43% of the trust currently invests in the US, although this is less than the broader market (the benchmark). 33% is also invested in UK businesses. Sector wise, the managers find the most opportunities in consumer staples and industrials companies.

When making any investment, taking a long-term view is at the forefront of the team’s analysis. They don’t tend to react to short-term blips in the stock market or wider economy. This means changes to the trust are kept to a minimum. Only a few new ideas are considered each year and investments are only sold if the managers feel the company’s outlook has changed, it becomes too highly valued, or they find a better idea elsewhere.

Over the past 12 months, Harries has made the same changes to the trust as to the open-ended fund which he manages with the same approach. He bought shares in sportswear company Nike, a company the team have followed for a number of years. Harries believes the company’s shares are attractively valued and he has growing confidence in the new CEO. New investments were also made in US food distributor Sysco and pharmaceutical company Novo Nordisk.

Investments in Medtronic, a medical devices manufacturer, and US chocolate company Hershey were sold. The team retain a favourable view of Hershey but believe the growth of the confectionary industry is slowing and there are currently better opportunities elsewhere.

Investors should be aware that the managers have flexibility to use derivatives and gearing (borrowing to invest) which can both increase risk. The level of gearing stood at 4% at the end of December 2025.

Culture

Troy Asset Management is an independent ‘boutique’ investment company founded in 2000. The majority of the business is owned by the company’s management and fund managers. We view this positively, as it means both the business and the funds are managed with a long-term view. It also helps align fund managers’ interests with those of investors.

Sheltering investors’ wealth has always been the most important thing at Troy. The fund managers believe that’s the best starting point for growing wealth over the long term. All Troy funds are managed in the same disciplined way – patiently investing in a small number of high-quality holdings. All fund managers at Troy contribute to the thorough research of around 200 companies deemed suitable for the group’s funds, creating a collegiate environment.

ESG Integration

Troy integrates environmental, social, and governance (ESG) issues using a materiality-based approach, meaning the fund managers focus on the issues they deem to be most important to the company’s investment prospects. They also have access to third party ESG data and research. How analysts and fund managers engage with ESG, and the overall quality of their research, is considered when calculating their incentivisation packages.

Engagement and voting are the responsibility of the investment team. All votes are discharged and usually cast in favour of management proposals, unless the team believes investors’ interests are better represented by abstaining or voting against company management. Their preferred course of action is to have dialogue with management ahead of casting votes against their recommendations.

The firm provides a proxy voting portal where investors can see every vote exercised, although no rationales are provided. That said, Troy publishes a summary of significant votes in its annual Engagement and Voting Disclosure report, along with rationales for voting both for and against proposals. The firm also produces a quarterly Responsible Investment report, which includes voting and engagement updates and case studies, alongside other responsible investment-related research.

This trust isn’t managed to a responsible mandate but ESG factors are considered as part of deciding whether to invest in a particular company. As of January 2026, 10.8% of the trust is invested in tobacco companies.

Cost

The net ongoing annual charge for the trust’s last financial year, to the end of March 2025, was 0.80%, a decrease from 0.96% in 2024. These charges are higher than some other trusts in the AIC Global Equity Income sector. Higher charges create a greater hurdle to delivering positive returns. Investors should refer to the latest annual report, accounts, and Key Information Document for details of the risks and charging structure.

If held in a SIPP or ISA, the HL platform charge of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies except in the HL Junior ISA, where no platform fees apply. The platform charge doesn’t apply if the trust is held in a Fund and Share Account.

Investment trusts trade like shares so both a buy and sell instruction will be subject to the HL share dealing charges within any HL account, except online in the HL Junior ISA.

From March 2026, the amount clients pay to invest with us will change. Find out more about these changes.

Performance

Since Harries and Boniek became managers of the trust in December 2020, its share price has risen 31.34%*. This is behind the 36.64% returns of the average trust in the AIC Global Equity Income sector. Over the same time period, the trust’s NAV has grown by 35.81%. Past performance isn’t a guide to the future.

In the 12 months to the end of January 2026, the trust saw modest growth of 0.09% in its NAV and a fall of 0.30% in its share price. The average share price return in the AIC Global Equity Income sector was 1.88%.

Tobacco companies Phillip Morris and British American Tobacco were among the top performing investments in the trust over the past 12 months. The managers reduced the investment in Phillip Morris after its strong performance meant they felt its shares no longer had as much growth potential. Swiss healthcare businesses Roche and Novartis also contributed positively to performance.

Investments that detracted from performance included US firm Paychex and UK company RELX. Both have been hurt by uncertainty around their future in an AI-driven economy. Harries believes we’re at an early stage of artificial intelligence (AI) adoption and it’s too early to determine the winners and losers, so he retains conviction in both companies.

The trust has a discount control mechanism to ensure the net asset value (NAV) and share price don’t stray too far from each other. At the time of writing the trust trades at a discount of 1.71%. This compares to an average discount of 0.98% over the past year.

The trust currently yields 3.55%, although remember yields are variable and aren’t a guarantee of future income.