Fund spotlight: Murray International Trust

by Dzmitry Lipski from interactive investor |

interactive investor's analysts give an update and view on the Murray International Trust.

Low interest rates and market uncertainty continue to provide a challenging environment to generate a sustainable income without taking on excessive levels of risk. 

As income generated by bonds has fallen steadily over the years, investors have increased their equity exposure in search of higher yields.

As we approach a late economic cycle with market valuations looking stretched in some areas, investors are looking for solutions to help preserve their capital and generate income. 

The fund

Murray International Trust (LSE:MYI) is a globally diversified investment trust that was launched in December 1907, and has been managed by Bruce Stout at Aberdeen Standard Investments since June 2004. The manager aims to generate long-term capital growth and an above-average dividend yield, while preserving capital through a globally diversified portfolio of equities and bonds.

The trust has a composite benchmark: 40% FTSE World UK and 60% FTSE World ex-UK indices. The high UK weighting is due to historical considerations as, in the past, other regions did not offer competitive dividend yields. However, Stout is currently considering if there is a more appropriate benchmark for the trust.

Whatever the trust's benchmark, the manager adheres to his benchmark-agnostic investment process, and has the flexibility to invest in companies across the whole market-cap spectrum and does not have any hard limits on geographic or sector exposure.

Following Aberdeen Standard Investments' philosophy, the manager focuses on defensive businesses where he has a high degree of confidence that the companies will be able to continue to deliver earnings and dividends, without paying too high a price for them. 

What's in it?

The portfolio is fairly concentrated with 51 equities and 27 bonds as at the end of August. He uses bonds to enhance the yield as well as to diversify equity exposure. Turnover is very low as many holdings have been in the portfolio for several years. 

Unlike its peers, the trust has almost half of the portfolio invested in Asia Pacific ex-Japan, Latin America and other emerging markets, as this is where the manager finds the best opportunities. 

The trust's top holdings include: Taiwan Semiconductor (NYSE:TSM) at 4.7%, Mexican airport operator Grupo Aeroportuario (NASDAQ:OMAB) at 3.9%, derivatives exchange CME Group (NASDAQ:CME) at 3.5%, Taiwan Mobile 3.4% and Unilever Indonesia at 2.9%.

How does it perform?

Since the manager took over the trust, he has been able to manage volatility and achieve consistent performance with an attractive level of income. Value investing has been out of favour the last few years which has presented a significant headwind for trusts that focus on quality and value companies. 

The trust currently offers a 4.3% yield which is among the highest yields in the global equity income sector. In addition to this, the trust has a progressive dividend policy and has grown its dividends for the past 15 years.  
 

    01/09/2017 - 31/08/2018 01/09/2016 - 31/08/2017 01/09/2015 - 31/08/2016 01/09/2014 - 31/08/2015
Murray International Trust (LSE:MYI) 8.07 -5.79 20.05 37.24 -15.06
MSCI World Index 7.00 12.13 18.09 25.28 3.52
Morningstar CE Global Large-Cap Blend Equity Sector 4.26 7.01 20.26 20.80 1.26

Source: Morningstar Direct as at 31st August 2019

ii view

Murray International Trust features on the ii Super 60 list of high-conviction investment ideas as a Global equity income recommendation. Managed by a highly experienced management team, the trust provides exposure to a globally diversified portfolio of high-quality stocks, and offers very attractive yield relative to its peers. In addition to generating long term capital growth and income, the trust can offer investors the benefits of capital preservation during periods of market weakness. However, the flexible and unconstrained nature of the portfolio means its returns can deviate from the index and peers. 

If you enjoyed this article, you may also like other funds picked for interactive investor's Super 60 range of high-conviction investment ideas. Click here to find out more.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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