The Trust’s capital has been invested in two main areas:
- Shares and other securities quoted on the world's Stock Exchanges
- Subsidiary companies
As at 31 March 2013, three fund managers managed the Trust’s Stock Exchanges portfolio. Blackrock Global Investors manage around £113 million invested in equities (shares), Insight Investment manages around £52 million in bonds, and Schroders Property Managers manage around £22 million in commercial property.
Shetland Leasing and Property Developments Limited
Shetland Leasing and Property Developments Limited (SLAP) is a wholly owned subsidiary of the Trust, overseen by an independent Board of Directors. Its main activity is the purchasing, developing and letting of properties throughout Shetland. The portfolio is valued at £20.6 million and it generated rental income of over £2.8 million in 2012/13.
Shetland Heat Energy and Power Limited
Shetland Heat Energy and Power Limited (SHEAP), is a wholly owned subsidiary of the Trust, set up to operate the Lerwick District Heating Scheme. It is overseen by an independent Board of Directors. SHEAP has over 1,100 customers receiving heat. For more information go to www.sheap-ltd.co.uk.
SCT Renewables Ltd
SCT Renewables Limited is a 100% owned subsidiary of the Trust. It has one director, who is a Trustee. It holds the Trust’s investment in Viking Energy Shetland LLP (VES LLP) which is investigating a wind farm project in central Shetland, in partnership with a subsidiary of SSE plc. The Trust has approved an investment to date of £9.72m. VES LLP is a limited liability partnership, rather than a limited company, and is overseen by an independent Board of Directors. It is 90% owned by the Trust, the remaining 10% being owned by Viking Wind Limited. Further information is available from the project’s website, www.vikingenergy.co.uk
C.T. Shetland (T.M.) Limited
C.T. Shetland (T.M.) Limited does not trade. It has one director, who is a Trustee. The purpose of the company is to register and own certification trademarks, for example, the knitwear trademark known as the Shetland Lady.
Any cash not invested as above is invested as short term loans on the money markets, where it achieves returns of at least the bank base rate.
Decisions about Investments
When the Trustees make decisions about investing the Trust’s capital, the law requires them to seek appropriate advice and act as reasonably prudently as commercial investors would. An investor is concerned with various criteria when investing money; these include rate of return (dividends / income / rent / interest earned), capital growth, and just how safe the money is. This applies whether the investments are on a Stock Exchange, or when they involve local assets. Investment, wherever it is made, involves using Trust funds wisely so as to produce income and to increase the value of those funds. To do this properly the Trust has to act commercially. It cannot “act charitably” towards its investments.
Trustees have to balance the higher average return but higher variation in annual returns of shares with the lower but more consistent average annual returns of other assets suitable for an institutional investor. After considering appropriate advice, Trustees have continued with an investment strategy based on a 50% shares: 50% non-shares approach. The Trust’s target is to be self-sustaining with net investable assets of £220 million (in March 2015 money). Trustees have considered the legal, financial and ethical aspects of various possible socially responsible investment mechanisms. Trustees have agreed to a policy of engagement on these issues with investee companies, through the fund managers.