The £105.6m investment trust has traditionally lagged its sector, but performance has picked up since Thomas Moore took over in November 2010. Most income investment trusts that are yielding more than the FTSE are trading at tight discounts or premiums at the moment, and Moore's fund is due a re-rating, according to Oriel Securities.
"We think there is scope for substantial discount re-rating and suggest switching out of the similar Standard Life UK Equity High Income OEIC, at NAV, into this trust on a large discount," said Iain Scouller, an analyst at Oriel.
Performance of fund vs trust and sectors over 3-yrs
Source: FE Analytics
Moore took over Standard Life UK Equity Income Unconstrained in 2009, and was appointed joint manager of the closed-ended offering at the end of 2010. He is expected to take full stewardship of the investment trust this year. Moore’s funds have enjoyed huge success under his stewardship, although they were hit hard in last summer’s market rout.
The investment trust’s total dividend increased by 5.1 per cent to 12.4p in the year to the end of September, and is well covered for now. Scouller points out that the trust’s earnings per share last year were inflated by VAT refunds & interest.
Standard Life Equity Income Trust’s shares are next due to go ex-dividend in early June, and Oriel is estimating an interim dividend of around 3.65p, up from 3.55p last year.