Murray Income Trust (MUT) celebrated its 100th anniversary in 2023. It is managed by Charles Luke and Iain Pyle of abrdn.
Below we highlight four things investors need to know about MUT.
1. A 50-year track record of consistently rising dividends looks set to continue.
The dividend has increased by around 1.9% per annum on average over the last 10 years, and usually implies a dividend yield of over 4%. The board has confirmed its intention to maintain annual dividend increases, as ‘a priority for the future’.
2. The trust’s portfolio is well diversified by sector and income source.
MUT invests in high-quality, mainly UK-listed stocks across a range of sectors, and it has scope to invest up to 20% of gross assets in overseas-listed companies. As a result, MUT owns some of the world’s leading companies, with strong long-term growth forecasts, including Microsoft, Novo Nordisk and Mastercard. These foreign holdings have been performing well so the managers have increased portfolio exposure to them. The trust’s income sources are also diversified. 80% of portfolio income is sourced from abroad, which provides protection from any deterioration in the UK economy. In addition, MUT’s option writing programme provides a further modest, uncorrelated supplement to portfolio revenues.
3. Long-term performance has outpaced the UK market.
MUT returned an annual average of 5.8% in NAV terms over the five years ended 30 June 2024 versus an average benchmark gain of 5.5%. The trust returned a respectable 10.0% on an NAV basis over the year to 30 June 2024, although this lagged the benchmark return of 12.8% due to the trust’s quality bias, as value stocks (typically lower on quality metrics) have outperformed in the UK.
4. MUT’s managers are upbeat about the future.
The UK general election has reduced political uncertainty and, with growth increasing, inflation easing and interest rates set to fall, MUT’s managers are positive on the near-term outlook. Looking further ahead, the trust has exposure to what the managers believe to be some ‘unstoppable long-term trends’, such as ageing populations, digital transformation and the transition to renewable energy. The managers expect these should provide tailwinds to earnings, dividend growth and MUT’s performance over the medium term. The managers also argue that the case for UK equities is compelling and will eventually tempt investors to return, as they view the market as ‘very cheap’ compared to its own history and relative to global markets.
