Investment trust insider on Murray International

Investment Trust Insider on Perpetual Income and Growth

Investment trust insider on Murray International – James Carthew: the challenge for Murray International investors

Murray International (MYI) is the largest of the global equity income trusts with a market value of £1.2bn, and the highest yielding at 5.5% compared to its AIC Global Equity Income sector average of 4.3%.

However, its long-term returns are a long way behind those of rivals. Over 10 years, MYI has returned 6.7% a year, on average. Over a year, its return on net assets is almost 20% behind that of JPMorgan Global Growth and Income (JPGI), for example. The shares stand on a 6% discount, wider than the 2% average of its six-strong peer group.

There is a material difference in the investment approaches of MYI and JPGI, however. MYI follows a traditional equity income style of seeking out companies with higher-than-average yields. JPGI invests in higher growth but lower yielding shares and makes up any shortfall in its revenue account by distributing capital.

Bruce Stout, longstanding manager of MYI, talked to investors and analysts recently following the publication of MYI’s interim report, which covered the first six months of 2020. Stout and MYI are trying to navigate many competing forces and the scale of this task should not be underestimated.

These include:

  • how best to manage an income fund;
  • value versus growth;
  • the depth and duration of the dividend recession;
  • inflation versus deflation;
  • and where best to invest your capital?

The first of these questions is encapsulated in the divergence in performance between MYI and JPGI. It is a topic that I have discussed here a few times and…  read more here