Fund Profile

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This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
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Overview

Managing over £1.7bn of assets, and with a history stretching back to 1907, Murray International (MYI) is one of the largest and most prominent investment trusts in the UK. With a global focus, MYI invests in both equities and fixed income assets, seeking to deliver total returns in excess of its benchmark with an above average dividend yield.

Whilst longer-term returns have been strong, returns in recent years have been more challenging with the trust lagging over the past five years, although the past 12 months have been more positive. Increasingly, relative performance has become more correlated to the relative fortunes of emerging market indices, with the trust consistently overweight to these regions.

Quality and valuation characteristics are key inputs into the stock analysis undertaken, and the latter consideration has led the manager, Bruce Stout, to hold a very underweight exposure to US equities for a number of years. With the US market a very strong performer relative to most global indices, this has been a headwind, but Bruce maintains his view that this market remains historically overvalued, buoyed by monetary policy as opposed to fundamental corporate performance.

Fixed income positions are held for income generation, and nearly wholly held in emerging market jurisdictions where the manager can generate sizeable yields. Presently MYI yields c. 4.4%, the second highest in the sector. The manager has been successful in increasing the dividend for many years, even during highly challenging times such as 2008-09.

Drawing on a global team of analysts, MYI constructs a relatively concentrated portfolio of around 50 equity positions, augmented by fixed income exposure. Sector exposure tends to be concentrated in areas such as consumer staples, with a stock-selection process which places importance on reliability of earnings and earnings growth. The manager ran technology funds in the 1990s and sees parallels to that period in the current mega-cap technology stocks, with investors seeking passive exposure to areas which have led the market over the past five years near the top of the cycle.

Having traded on an (often sizeable) premium for much of its recent history, Murray International has seen this narrow in recent years, partly as a result of more negative sentiment towards its preferred investment approach and partly as the board remains active in trying to manage premium or discounts that exhibit too great a degree of disparity to NAV. Despite a prolonged period in a more challenging market environment for its investment style, MYI remains at a slight premium to NAV and widely traded.

Kepler View

MYI has a clear strategy in place, with a top-down view of the global macroeconomic environment informing how the manager views valuations and potential for earnings growth. The significant overweight to emerging markets, and underweight to US markets, has been a headwind in recent years, but is consistent with the manager’s well-published views. Despite the often adverse economic and trading conditions experienced by emerging and indeed global markets, the trust has successfully increased its dividend every year since 2004 (and it has not declined in the past 25 years), which is testament to the robustness of the underlying businesses.

Clearly recent years have proven more challenging cumulatively, but the trust has shown it retains the ability to generate outperformance in conducive conditions. Emerging market outperformance and US underperformance will be amongst the key nearer term drivers of NAV returns, but the ability of the underlying companies to grow earnings and dividends is likely to remain tied primarily to the macroeconomic and demographic factors highlighted by the manager (as discussed in ‘Portfolio’). Should we see a sea-change in environment, with sustained emerging market leadership and weaker US market returns, MYI would likely revert to the outperformance which previously gained it such prominence.

bull bear
Consistent growth in dividend highlights reliability and resilience of underlying businesses
If the market environment of the previous five years persists, MYI will likely continue to underperform
Exposure to faster-growing consumer markets in a reasonably concentrated portfolio Stock selection process and global mandate means unlikely to capture full upside if EMs outperform
Attractive headline level of yield
Continue to Portfolio

Fund History

23 Oct 2024 Your website needs you
Share your views on how investment trust fees should be declared…
31 Jul 2024 Strength in diversity
The UK may offer higher yields, but at what cost?
22 Dec 2023 Fund Analysis
MYI’s diversified approach may offer stability in an uncertain environment...
11 Jan 2023 Fund Analysis
MYI’s benchmark agnostic approach may continue to benefit as the same structural economic challenges persist into the new year despite its current premium rating…
02 Nov 2022 The stability dividend
Our analysis shows that trusts paying a regular income suffer less discount volatility...
26 Jan 2022 Fund Analysis
MYI offers investors one of the highest yields in its sector, coupled with a unique approach to income investing and a historically wide discount…
28 Jan 2021 Fund Analysis
MYI offers a high income from a highly differentiated approach…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
22 Jul 2020 Fund Analysis
MYI offers capital growth and an attractive level of income through an equity and fixed income portfolio of global companies…
05 Jun 2020 Deep impact
Audio and presentations from our conference this week, where fifteen of the world's best fund managers described a profoundly altered investment landscape...
08 Oct 2019 Fund Analysis
With a global portfolio skewed towards emerging markets, Murray International looks to invest in high quality companies with strong growth prospects at a reasonable price...
26 Jul 2018 Fund Analysis
Bruce Stout remains resolutely bearish and the portfolio continues to underperform against a momentum driven backdrop..
13 Oct 2015 Global funds for income, growth and stormy weather
We compare investment trusts and funds across five global equity sectors, and highlight four of the best...
13 Oct 2015 Fund Analysis
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Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.