Schroder UK Mid Cap Fund PLC on Wednesday declared its largest ever annual dividend as its total return underperformed the benchmark in the last year but continued to outperform in the long-term.

The London-based mid-cap focused investment trust declared a final dividend of 15.5 pence per share for the year to the end of September, to be paid on February 28.

Combined with the interim dividend of 6.0 pence already paid, the total dividend for the year is 21.5 pence per share, an increase of 4.9% on last year. The company said it is the largest annual distribution to shareholders for the company to date.

The company said its net asset value total return per share in the year to the end of September was 17%, down on the benchmark FTSE Mid 250 ex Investment Trusts Index which was up 21%.

Although it underperformed the benchmark in the last 12 months, the company said it is ahead of the benchmark over the last five and ten years.

‘There has been no change in the investment process which has delivered this successful investment performance,’ the company said.

Net asset value per share was up 14% to 702.60 pence from 618.32 pence year-on-year.

Schroder UK Mid Cap said the discount ‘marginally widened’ to 12.3% from 12.0% at the beginning of the year.

The company also said chair Robert Talbut will retire from the board after a nine-year term. Talbut will be replaced by Harry Morley after the annual general meeting on February 24.

Morley was appointed as non-executive director in September 2023 and has acted as chair of the remuneration committee. He was previously chief executive officer of Armajaro Asset Management LLP and co-founder and chief financial officer of Tragus Holdings Ltd, the owner of the restaurant chains Cafe Rouge and Bella Italia. He is currently non-executive director and chair of the audit committee for JD Wetherspoon plc.

The company said the board and investment manager ‘remain positive’ about the outlook for the UK economy and said it is ‘encouraging’ that the ‘supportive environment’ is starting to be reflected in interest and expectations for the UK equity market. The company said the mid-cap sector is ‘particularly attractive’ due to growth expectations and ‘healthy dividend prospects’.

Outgoing Chair Robert Talbut said: ‘We continue to remain optimistic about the outlook for the UK mid-cap sector and the company’s portfolio holdings, which are largely focused upon longer term growth businesses. The investment manager has a proven ability to find attractive investment opportunities with the prospect of long-term returns for shareholders.’

Shares in Schroder UK Mid Cap Fund were down 1.0% to 601.75 pence in London on Thursday morning.

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