STS Global Income & Growth Trust says its share price return for the year ended 31 March 2026 was -2.5%, behind the return from the Lipper Global – Equity Global Income Index of 13.5%. The net asset value total return was -4.6%. The chair Sarah Harvey says “This represents a material shortfall and is disappointing”.

The total dividend for the period was 8.452p, up 1% on last year (behind the rate of inflation). The trust operates a discount control mechanism. 7.8m shares were bought back at a total cost of £18.7m, an average discount of 1.2%, and 0.6m shares were issued for net proceeds of £1.5m, at an average premium of 0.9%.

The chair’s statement acknowledges that “many of the high-quality, cash-generative businesses that the company favours were marked down on fears relating to disruption from AI and pressure on consumers”. However, the board is not convinced that there has been a fundamental deterioration in the quality of the businesses that the trust owns.

The manager’s report highlights share price falls for software companies such as ADP, Paychex and Amadeus, and consumer staples companies such as Diageo and Unilever.

When it comes to the selloff in stocks that are perceived by some as threatened by agentic AI, the manager says “While acknowledging that AI is a transformational technology, we believe the threat is currently being overly discounted by investors.” It deploys an argument we have seen elsewhere that “these companies are not just selling software but regulatory compliance, trust and certainty – attributes not lightly given up”.

The manager also questions the business models of the hyperscalers that are deploying vast capex to build AI infrastructure, saying “the software companies underpinning this hardware spend (e.g. OpenAI, Anthropic, DeepSeek) are generating a fraction of the revenues needed to sustain it. The capex-to-sales ratio for this industry, even using optimistic estimates, implies companies making large losses. This is simply unsustainable. Either revenues and profits must become apparent soon, or expenditure will be curtailed. The implications of such a potential misallocation of capital cannot be overstated. Should AI spending fall, it will likely hurt the companies that have hitherto benefitted and may well allow software companies to recover.”

QuotedData’s Matthew Read said: “As the chair acknowledges, this is a very disappointing set of results for STS Global Income & Growth that will not make comfortable reading for shareholders. However, the strong underperformance appears to reflect style headwinds rather than fundamental deterioration in the portfolio. Perhaps the most interesting thing is the reason for this underperformance – the trust has been hurt by its lack of exposure to the sectors driving markets higher – particularly energy and AI-related infrastructure beneficiaries – while many of its high-quality software and consumer holdings have been derated on fears around AI disruption.

This reflects the managers’ explicitly contrarian stance on the AI boom. The managers argue that markets may be overestimating the long-term returns from today’s enormous AI-related capital expenditure, while underestimating the resilience of established businesses with strong brands, switching costs and embedded customer relationships. If they’re right, STS could, at some point, see a significant recovery. If not, it seems likely that we could see more of the same.”