Investment Companies News

Murray International underperformed its benchmark for the six months to 30 June, hit by its Japanese and fixed interest holdings.

The £540m trust, which is managed by Stephen Docherty and Bruce Stout at Aberdeen Asset Management, saw its net asset value rise 6.6% against a rise of 7.7% in the trust’s benchmark (40% FTSE World UK and 60% World ex UK). It will pay an interim dividend of 4.3p, up 13.2% on last year.

The group’s Japanese holdings suffered from continued weakness in the yen. These now make up 12.1% of the portfolio. This weakness more than offset gains from the managers’ move out of the US and into the smaller Asian markets. The trust now has 22.1% in the Asia ex. Japan region.

The trust’s largest geographic weighting is the UK at 22.5%. The group saw a ‘satisfactory’ return from the UK portfolio of 8.3%. The rise of sterling against most foreign currencies constrained returns from overseas market and affected portfolio performance.

The managers remain conservatively positioned, believing that while the outlook for earnings and interest rates elsewhere in the world remains robust, structural financial leverage in the US housing market remains a ticking time bomb. The trust is still weighted to equity, with 78 equity holdings and 23 fixed interest holdings. It has 13.2% leverage.

The managers believe the prospects for equity markets outside the UK and US are much brighter. The savings pool in emerging markets and Asia is generating domestic economic growth opportunities in countries previously reliant on exports. The trust now has 38.4% of its holdings in these areas.

Chairman John Trott says: 'As global growth becomes more geographically diverse, so too has the asset allocation of the company, capitalising on the breadth and depth of high quality, strongly-managed companies in various growth businesses throughout the world. Accordingly, we feel well-positioned to benefit once the markets have settled down.'

The share price was up 10p to 633.5p. It currently trades at a small premium to net asset value. The trust has seen steady consistent growth for five years now, with good income generation. The recent ECJ ruling that investment trusts should not pay VAT on investment management fees may also mean a small windfall for investors as the trusts claw back wrongly-paid tax. This is a solid long-term holding.