There are four things investors need to know about Murray International Trust (ticker: MYI).
1. Murray International is a well-established trust with a history of income growth.
Murray International Trust is one of the oldest UK investment companies, having launched in 1907, and is traded on the premium segment of the London Stock Exchange. Throughout its long history, the trust has had a continuing theme of growing income. Murray International Trust provides shareholders with an above-average dividend yield from a globally diversified portfolio of equities and fixed-income securities. A differentiating feature of the trust is that around 30% of the fund is invested in emerging markets as its managers believe these regions offer the prospect of higher economic growth than developed markets, along with relatively attractive valuations.
2. Murray International is a popular trust with a large number of retail shareholders.
Following the retirement of long-term manager Bruce Stout at the end of June 2004, Murray International Trust is managed by Martin Connaghan and Samantha Fitzpatrick, who had worked with Stout since 2001. As a result of their long-term collaboration with Stout, there has been no change in the investment approach. Connaghan and Fitzpatrick aim to generate long-term capital growth (while preserving capital during periods of stock market weakness) and an above-average dividend yield.
The managers employ a low-risk strategy, essentially seeking ‘good businesses at good prices’, which should help to protect investors’ capital during periods of market volatility. They invest for the long term and portfolio turnover is very low – some of the positions have been in the fund for more than 20 years. Murray International Trust’s portfolio has around 60 holdings, which is at the lower end of the required 45 to 150 names. Over time, the allocation to bonds and cash has declined in an environment of lower bond yields and now makes up less than 10% of the fund.
3. Bottom-up stock selection, drawing on the expertise of abrdn’s regional teams.
Connaghan and Fitzpatrick select stocks on a bottom-up basis, without consideration of the make-up of the trust’s all-world reference index. Firms are considered on five key factors: the durability of its business model and its economic moat; the attractiveness of the industry in which it operates; the strength of its financials; the capability of its management team; and an assessment of its ESG credentials. Company valuations are assessed across a variety of relevant measures including earnings yields, free cash flow yields and dividend yields. The managers select companies that have the most attractive quality and valuation characteristics, while offering the best expected risk-adjusted returns. abrdn uses a global coverage list that is constructed by each of the specialist regional analyst teams (developed markets, Asia Pacific ex-Japan, Japan and emerging markets) containing all companies with buy-and-hold recommendations, which provides the trust’s investment universe.
An important feature of the trust is a significant below-market allocation to the US, which is the country that dominates global indices. Murray International Trust’s portfolio is broadly diversified by geography (including emerging markets) and by sector. However, the differentiated portfolio structure means that the trust’s performance can differ markedly to that of its reference index. The top 10 holdings make up around 35% of the fund and are a mixture of higher-yielding stocks such as banks and energy companies and those with lower yields but have dividend growth potential, including semiconductors.
4. The trust’s board employs a progressive dividend strategy.
Murray International Trust’s progressive dividend strategy means that in years where there is a lower level of income received, distributions are supplemented from reserves. While real dividend growth has been tricky over the last few years, it has been achieved in most of the last 20 years, with the trust’s dividend compounding at an annual rate of around 7%.
Taking the FY24 annual dividend into account, Murray International Trust has now achieved the status as one of the AIC’s dividend heroes, which are funds that have delivered 20 or more years of consecutive dividend growth.
Published 4 February 2025.
