Murray Income Trust (MUT) has significantly outperformed its FTSE All-Share Index benchmark and the majority of peers over the past year, in large part due to its focus on high-quality companies with strong balance sheets, which have held up better than others in recent bouts of market volatility. Manager Charles Luke takes a long-term approach, giving time for company fundamentals to win through and reducing trading costs. The trust has an increased focus on mid-cap and smaller companies (now c 30% of the portfolio) and also has the ability to invest up to 20% (currently c 11%) overseas. The manager highlights MUT’s attractive income characteristics, with a 4.0% yield, above-average dividend growth and dividend security, and a 46-year record of increasing its annual payouts.
The UK market remains unloved by global investors, with Brexit uncertainty providing an additional headwind on top of wider fears over a slowing global economy and the impact of trade wars. However, this has led to below-average valuations, potentially giving rise to attractive opportunities in quality companies, particularly in the less well researched smaller- and mid-cap space.
Strong performance record, both long-term and more recently. Enhancements to investment team and process as a result of Aberdeen/Standard Life merger. Strong focus on environmental, social and governance (ESG) factors, which research shows is important in generating performance. 46-year record of annual dividend growth, with move to quarterly payments.
At 16 October 2019, MUT’s shares traded at a 4.0% discount to cum-income NAV. This was an increase from the narrowest point in three years (3.4%, in May 2019) but is well below the average discounts over one, three and five years, which range from 6.2% to 7.7%. The discount has narrowed on the back of strong NAV performance; while the higher share price has also caused MUT’s dividend yield to dip to 4.0%, the portfolio continues to enjoy higher forecast dividend growth than the index.