Company profile - Aberdeen Asian income fund feature image - 28062019- JPGmoney & pens

Quality stocks prove a safe haven in tough times

Murray Income Trust 7 May 2020 Update
Download PDF

Murray Income Trust

Quality stocks prove a safe haven in tough times

Investment trusts
UK equity income

12 May 2020

Price

720.0p

Market cap

£476.0m

AUM

£520.5m

NAV*

761.5p

Discount to NAV

5.4%

NAV**

771.7p

Discount to NAV

6.7%

*Excluding income. **Including income. As at 5 May 2020.

Yield

4.8%

Ordinary shares in issue

66.1m

Code

MUT

Primary exchange

LSE

AIC sector

UK Equity Income

Share price/discount performance

Three-year performance vs index

52-week high/low

938.0p

598.0p

974.0p

640.6p

**Including income.

Gearing

Gross*

9.7%

Net*

7.1%

*As at 31 March 2020.

Analysts

Joanne Collins

+44 (0)777 552 4686

Sarah Godfrey

+44 (0)20 3681 2519

Murray Income Trust is a research client of Edison Investment Research Limited

Murray Income Trust (MUT) aims to provide a high and growing income combined with capital growth, through investment in a diversified portfolio of mainly UK equities. It has achieved these objectives both recently and longer term, delivering 46 consecutive years of increasing annual dividends, and outperforming its benchmark (a broad UK stock market index) and most of its peers during the recent market turbulence and over the long term. Manager Charles Luke’s approach is based on identifying dependable stocks, which have the capacity to weather downturns, and on diversification across income, capital and sector. He focuses on high-quality companies, including mid-caps, which he believes produce less volatile income streams and are better placed to navigate uncertain times and capitalise on opportunities to create value over the longer term.

MUT delivering outperformance (NAV TR relative to UK index)

Source: Refinitiv, Edison Investment Research

The market opportunity

The UK market was out of favour with global investors before the coronavirus crisis, and since the sell-off it has cheapened in absolute as well as relative terms. There are many undervalued, quality UK companies well placed to weather the current crisis and prosper as the economy recovers. There is particular value to be found among less well researched mid-cap stocks, which may present attractive opportunities for long-term investors.

Why consider investing in Murray Income Trust?

A high-quality portfolio able to weather market turbulence.

Diversification by income, capital and sector.

Excellent performance record, recently and over the long term.

An attractive, resilient dividend yield and a 46-year record of annual dividend growth.

Discount narrows and dividend yield rises

As at 5 May 2020, MUT’s shares traded at a 6.7% discount to cum-income NAV. This is wider than in recent times – it nudged into premium territory briefly in early March – but narrower than the average levels of 7.0% and 7.3% over the past three and five years respectively (see Exhibit 10). The discount has been in a broadly narrowing trend since mid-2018. MUT’s dividend yield currently stands at 4.8%.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Murray Income Trust (MUT) aims for a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. Its investment policy is to invest in companies that have potential for real earnings and dividend growth, while also providing an above-average portfolio yield. The emphasis is on the management of risk and the absolute return from the portfolio. MUT measures its performance versus the broad UK stock market.

17 Feb 2020: Results for six months to 31 Dec 2020 showed TR of +7.7% (share price basis) and +9.0% (NAV basis), outperforming benchmark return of +5.5%.

November 2019: Declaration of three interim dividends of 8.25p per share for the year ending June 2020, to be paid on 20 Dec 2019, 20 March 2020 and 19 June 2020. Fourth interim dividend, announced in August 2020, will be at least 8.25p.

Forthcoming

Capital structure

Fund details

AGM

November 2020

Ongoing charges

0.65%

Group

Aberdeen Standard Investments

Annual results

September 2020

Net gearing

7.1%

Managers

Charles Luke (lead), Iain Pyle (deputy)

Year end

30 June

Annual mgmt fee

Tiered (see page 8)

Address

1 George Street,
Edinburgh, EH2 2LL

Dividend paid

Quarterly

Performance fee

None

Launch date

1923

Trust life

Indefinite

Phone

0808 500 0040 (retail)/0131 222 1863

Continuation vote

No

Loan facilities

£40m loan notes/£20m bank loan

Website

www.murray-income.co.uk

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

MUT’s board aims to increase the total dividend each year. Four interim dividends are normally paid each year in March, June, September and December.

Renewed annually, MUT’s board has the authority to allot shares up to the equivalent of 5% of the share capital, and buy back up to 14.99% of shares, in order to manage a premium or a discount.

Shareholder base (as at 29 February 2020)

Portfolio equity exposure by geography (as at 30 March 2020)

Top 10 holdings (as at 31 March 2020)

Portfolio weight %

Company

Country

Sector

31 March 2020

31 March 2019*

AstraZeneca

UK

Healthcare

4.0

2.6

GlaxoSmithKline

UK

Healthcare

4.0

2.2

Diageo

UK

Consumer goods

3.7

3.6

RELX

UK

Media

3.5

2.6

Roche

Switzerland

Healthcare

3.2

2.5

Unilever

UK

Consumer goods

3.2

3.2

National Grid

UK

Utilities

3.1

2.3

Rio Tinto

UK

Materials

3.1

2.9

Assura

UK

Healthcare

2.9

N/A

Aveva

UK

Technology

2.7

2.6

Top 10 (% of portfolio)

33.4

31.2

Source: Murray Income Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in end-March 2019 top 10.

Market outlook: Low valuations may offer opportunity

A global recession seems inevitable in the wake of the coronavirus pandemic. Even once major economies emerge from lockdown, social distancing measures will remain a heavy burden for many businesses until a vaccine is available. Additionally, summer holiday and business travel plans will likely be curtailed. Many businesses, especially small ones and those burdened with debt, will not survive protracted restraints on trading. For UK investors, there are also significant uncertainties related to trade relations with the EU and US. Post-Brexit negotiations have been delayed by the onset of the virus, and the forthcoming presidential election will hamper British efforts to reach a rapid trade agreement with the US.

None of this bodes well for the near-term outlook for UK equity markets. However, valuations on quality UK stocks were relatively low before the coronavirus crisis, due to investor outflows since the 2016 EU referendum. They are even cheaper now, in absolute as well as relative terms. This arguably represents a great opportunity for long-term investors to purchase undervalued, quality UK stocks. These are the companies best placed to survive current challenges and prosper once the global economy eventually moves into recovery.

Exhibit 2: Market performance and valuation

Performance vs index

Forward P/E and P/E premium (discount) to World Index  

Source: Refinitiv, Edison Investment Research

Fund profile: Aiming for high income and growth

Founded in Scotland in 1923, MUT has been part of the Aberdeen Asset Management (AAM, now Aberdeen Standard Investments, or ASI) stable since 2000. Charles Luke has been the trust’s portfolio manager since 2006. His deputy, Iain Pyle, joined the team in 2018. The Aberdeen/ Standard Life merger in 2017 saw the UK element of AAM’s Pan-European equity team (of which Luke was a member) merge with SLI’s UK team to create ASI’s 16-strong UK equity team.

MUT aims to realise a high and growing income, combined with capital growth, through investment in a diversified portfolio of mainly UK equities, although up to 20% may be invested in non-UK stocks. The trust has a longer-term investment focus and targets good-quality, well managed companies, with attractive valuations and strong ESG characteristics. Option writing on a modest scale is used to enhance portfolio income and diversification.

MUT has a 46-year record of annual dividend growth. It is a member of the Association of Investment Companies’ UK Equity Income sector and uses a broad UK stock market index as its benchmark. For comparison purposes in this note, we are using the CBOE UK All Companies index. Performance is also measured against peers in the UK Equity Income sector. Gearing of up to £60m (c 11.5% of net assets) is accessible via long-term, fixed-rate borrowings and a flexible multi-currency bank loan. Net gearing as at end-March 2020 was 7.1%.

The fund managers: Charles Luke and Iain Pyle

The manager’s view: Quality the key to weathering crisis

Manager Charles Luke views the coronavirus crisis as ‘a highly unusual episode for equity markets’, given that it represents a combination of a demand and supply shock leading to significant concerns about the financial viability of companies. However, he believes that in general, dependable companies with robust balance sheets and strong business models are best placed to trade their way through this very challenging environment. ‘These are the types of companies that we focus on,’ he says. Luke believes that while it is impossible to mitigate the impact of market falls entirely, MUT’s careful approach to capital allocation has held the portfolio in relatively good stead through this very challenging period.

Luke stresses that the team continues to closely monitor the financial strength of its holdings, with an emphasis on operational and financial leverage and cash generation. He also places particular value on remaining in close dialogue with the companies MUT holds, to understand their thoughts and plans. Luke says he is watching the market closely for opportunities to add to holdings where the team believes the market reaction has been too severe.

Looking ahead, the manager sees the evolution of the health crisis as key – news of a vaccine would be positive for investor sentiment, while evidence that the virus was mutating and becoming more virulent would trigger renewed market weakness. The team is also closely watching economic developments, in particular the impact of COVID-19 on the US economy. Luke does not share the concerns of some investors that the recent, very aggressive fiscal and monetary stimulus implemented by western governments will lay the basis for future inflation.

While the health and economic crises run their course, Luke says he is happy with the current positioning of the portfolio and does not intend to make significant changes. ‘These are difficult times for all, but the fund is in a relatively good position, with strong revenue reserves. We have adopted a cautious stance for some time and see little reason to shift from this conservative focus on higher-quality businesses,’ he concludes.

Asset allocation

Investment process: Diverse, quality stocks with long-run focus

Manager Charles Luke and his deputy, Iain Pyle, are part of a five-strong UK equity income team, which sits within Aberdeen Standard Investment’s (ASI) UK equity team. This team provides Luke with detailed research coverage on the UK’s 350 largest listed companies. Luke also has access to the work of ASI’s UK smaller companies team, while ideas on overseas stocks are drawn from ASI’s global research network. Investment ideas are tested against a quality filter, which includes assessments of the attractiveness of the industry, the durability of the company’s business model, its financial strength, management capability, and environmental, social and governance (ESG) risks. All ideas are subject to rigorous team scrutiny and debate. Fundamental research is supplemented by regular company meetings.

The team seeks undervalued companies with high margins and return on equity, low levels of net debt, above-average earnings and dividend growth potential, along with the capacity to react quickly to adverse developments. MUT typically invests in a portfolio of between 30 and 70 stocks, with a long-term timeframe, to give holdings time to realise their potential value. Portfolio turnover is therefore low, with stocks held for an average of about five years. However, if a company’s fundamentals deteriorate, the team will exit swiftly. All positions are kept under continuous review, supported by the UK equity team’s daily meetings to discuss company news and outlook changes.

Diversification is key to MUT’s approach. About 30% of the portfolio is invested in mid- and small-cap companies, while overseas stocks may represent up to 20% of holdings. This provides diversification by size and geography beyond that of some other UK equity income funds. Additionally, the team seeks to diversify holdings by income and capital (with a limit on each of 5% per holding) and by sector. Holdings in the top three sectors, as defined by Industry Classification Benchmark (ICB) classifications, are limited to 50% of the portfolio, and the top five holdings may not exceed 40%. Overseas holdings have also allowed MUT to benefit from currency gains thanks to the weakness of the pound.

The team uses option writing to augment the investment process in two ways. Firstly, it allows the team to optimise exposure to individual holdings, mainly via the writing of call options, to potentially reduce exposure to particular stocks. Additionally, option premium income provides a modest, uncorrelated supplement to portfolio income.

MUT actively engages with portfolio companies on ESG matters, based on the view that this helps foster stronger long-term performance. To this end, the manager draws on the expertise of ASI’s 30-strong, in-house ESG team.

Exhibit 3: MUT quantitative quality characteristics

MUT (%)

Benchmark (%)

Return on equity

16.2

12.4

Operating margin

17.6

16.4

Net debt (ex-financials)

72.8

84.4

EPS growth three-year forward

6.7

6.4

DPS growth three-year forward

5.0

4.0

Source: Murray Income Trust, Edison Investment Research. Note: Calculated as weighted medians, as at 31 December 2019.

Current portfolio positioning

As at 31 March 2020, MUT’s portfolio held 58 stocks, unchanged since 30 September 2019. There were 50 UK and eight overseas stocks, compared to 51 UK stocks and 7 overseas stocks at end-September 2019. The top 10 holdings (Exhibit 1) comprise 33.4% of the portfolio, a little higher than 31.2% at end September 2019. Overseas holdings represent 13.5% of the portfolio, up from 11.2% at 30 September 2019 (Exhibit 4), following purchases of Telenor, a Norwegian telecommunications stock, and Mowi, a Norwegian food producer, and the sale of Scandinavian Tobacco. With the exception of Microsoft, all of the overseas holdings are listed in Switzerland and the Nordic countries.

Exhibit 4: MUT’s overseas holdings as at 31 March 2020

Company

Country

Sector

% of portfolio end-March 2020

Roche Holdings

Switzerland

Pharmaceuticals & biotechnology

3.2

Microsoft

US

Software & computer services

2.1

Nestlé

Switzerland

Food producers

1.7

VAT Group

Switzerland

Industrial engineering

1.7

KONE

Finland

Industrial engineering

1.5

Novo-Nordisk

Denmark

Pharmaceuticals & biotechnology

1.5

Telenor

Norway

Telecommunications

1.4

Mowi

Norway

Food producers

0.4

Source: Murray Income Trust, Edison Investment Research. Note: Excludes options.

Recent significant market volatility has provided the opportunity to reassess the long-term attractions of various portfolio holdings and marginally reposition the portfolio in anticipation of a potential recovery. In March, the manager added to holdings of Rio Tinto, M&G, Coca-Cola Hellenic Bottling and Mondi, which were all viewed as attractively valued with sound long-term growth prospects. The manager also reduced exposure to a number of companies that are particularly exposed to the impact of COVID-19, closing small positions in Signature Aviation, Hostelworld, Compass, Diploma and HSBC.

MUT’s portfolio remains well diversified on a sectoral basis. The most significant active positions versus the benchmark are a 6.8pp underweight to financials, a 5.7pp underweight to oil and gas, a 4.3pp overweight to technology, a 2.6pp overweight to healthcare and a 2.3pp overweight to industrials (Exhibit 5). The portfolio also has modest overweights to utilities, consumer goods and telecommunications.

The manager continues to use option writing to modestly enhance portfolio income, selling a put on Mowi in February.

Exhibit 5: Portfolio industry exposure vs benchmark (% unless stated)

Portfolio end-March 2020

Portfolio end- March 2019

Change (pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Financials

19.2

24.7

(5.5)

26.0

(6.8)

0.7

Consumer goods

17.2

16.0

1.1

15.6

1.6

1.1

Healthcare

13.8

9.9

3.9

11.2

2.6

1.2

Industrials

13.4

12.8

0.5

11.1

2.3

1.2

Consumer services

11.4

10.9

0.5

11.3

0.1

1.0

Basic materials

7.0

8.3

(1.3)

7.4

(0.4)

0.9

Technology

5.3

4.7

0.7

1.0

4.3

5.2

Utilities

5.2

2.4

2.8

3.7

1.5

1.4

Oil & gas

4.6

6.8

(2.1)

10.3

(5.7)

0.4

Telecommunications

2.9

3.4

(0.6)

2.4

0.5

1.2

100.0

100.0

100.0

Source: Murray Income Trust, Edison Investment Research. Note: adjusted for cash.

Performance: Consistently strong, near & longer term

Exhibit 6: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

CBOE UK All Companies (%)

MSCI UK High Dividend Yield (%)

MSCI AC World
(%)

31/04/16

(7.0)

(7.5)

(5.7)

(5.8)

(0.5)

31/04/17

24.2

24.1

20.3

21.8

31.1

31/04/18

2.2

2.1

8.1

7.2

7.8

31/04/19

12.6

8.5

2.5

3.8

11.6

31/04/20

(4.5)

(6.6)

(17.2)

(18.2)

(1.2)

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

Exhibit 7: Investment trust performance to 30 April 2020

Price, NAV and index total return performance, one-year rebased

Price, NAV and index total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

MUT’s performance has been consistently strong in relative terms during both the recent market turbulence and over the longer term. Its holdings of quality stocks have proved relatively resilient during the sell-off. The April return of 8.0% in share price terms and 7.8% on an NAV basis compare favourably with the CBOE UK All Companies index return of 5.0%. In the three months to end-April, returns in share price and NAV terms were -15.0% and -15.6% respectively, notably ahead of the CBOE UK All Companies index return of -19.1%. The trust also outperformed the index over six months and one, three, five and 10 years, recording positive absolute returns over three, five and 10 years (Exhibit 7, right-hand chart).

The MSCI UK High Dividend Yield Index could be viewed as a closer proxy than the broad UK stock market for the investment universe of a UK equity income fund. Exhibit 8 shows that MUT has also outperformed this index significantly in all periods, except for a slight underperformance in April 2020. However, it has underperformed the MSCI AC World index in all periods shown, not surprisingly given the strength in the US market, which dominates this index. Sterling’s weakness over recent years has also contributed to MUT’s underperformance against the global index, as it boosts returns from foreign investments.

Since the onset of the coronavirus crisis, performance has been helped by the portfolio’s sector positioning. Underweight positions in financials and oil & gas, and overweight positions in healthcare and utilities, have assisted returns. Stock selection has also contributed. In particular, the defensive qualities of Roche, SSE and Assura led to their outperformance and enhanced MUT’s relative returns, as did underweights to HSBC and Lloyds Bank, whose share prices declined.

Exhibit 8: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to CBOE UK All Cos

2.8

5.1

10.7

15.3

19.9

22.0

31.4

NAV relative to CBOE UK All Cos

2.6

4.4

9.2

12.7

12.7

14.0

22.3

Price relative to MSCI UK High Div Yld

(0.6)

9.0

7.5

16.8

20.8

21.7

21.7

NAV relative to MSCI UK High Div Yld

(0.8)

8.3

6.1

14.2

13.6

13.8

13.2

Price relative to MSCI AC World

(0.9)

(7.8)

(4.1)

(3.3)

(7.5)

(18.1)

(14.2)

NAV relative to MSCI AC World

(1.0)

(8.4)

(5.4)

(5.4)

(13.0)

(23.4)

(20.1)

Source: Refinitiv, Edison Investment Research. Note: Data to end-April 2020. Geometric calculation.

Exhibit 9: NAV total return performance relative to CBOE UK All Cos index over three years

Source: Refinitiv, Edison Investment Research

Discount: Recent events interrupt narrowing trend

Before the recent market turbulence, MUT’s discount to NAV had been diminishing steadily since the fourth quarter of 2018. It tightened more rapidly in February 2020 and the share price nudged briefly into premium territory in March, before moving back to a discount at the end of the month as the share price declined (Exhibit 9). As at 5 May 2020, the trust’s shares were trading at a 6.7% discount to cum-income NAV. This compares with historical average discounts of 4.7%, 7.0%, 7.3% and 4.0% over one, three, five and 10 years respectively.

Exhibit 10: Share price premium/discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

MUT is structured as a conventional investment trust, with one share class. As at end-March 2020, it had 66.1m shares in issue, with a further 2.5m in treasury. The board has authority to repurchase up to 14.99% of shares to manage a discount, or allot up to 5% to manage a premium. However, there have been no repurchases since end-October 2018, as the shares have benefited from the strong NAV performance. The managers have access to gearing of up to £60m (c 11.5% of net assets) via £40m of 10-year loan notes (issued in November 2017 with a coupon of 2.51%) and a £20m multi-currency borrowing facility with Scotiabank. At end-March, net gearing stood at 7.1%.

The trust pays Aberdeen Standard Fund Managers a tiered annual management fee based on net assets: 0.55% up to £350m, 0.45% from £350m to £450m and 0.25% above £450m. Fees are charged 70% to capital and 30% to revenue. There is no performance fee. Ongoing charges for FY19 were 0.65%, unchanged from the previous year and below the average fee of 0.90% for the AIC UK Equity Income peer group.

Dividend policy and record

MUT aims to provide investors with a high and growing dividend, paid quarterly. The 34.0p FY19 dividend was 2.3% higher than the 33.25p dividend paid for the previous 12 months, delivering the 46th successive year of dividend increases. At the AGM held in November 2019, shareholders approved a new dividend policy under which four interim dividends will be paid in December, March, June and September each year, for the years ending on or after 30 June 2020. This replaces the previous policy, which paid three interim dividends in January, March and June, and a final dividend following shareholder approval at the November AGM. The new policy thus ensures that investors will be paid dividends earlier and at more regular intervals. In November 2019, the trust announced that it would pay 8.25p per share on 20 December 2019, 20 March 2020 and 19 June 2020 for the first three interim dividends, with the board announcing the fourth interim dividend in August 2020, for payment the following month. Based on the current share price and the last four dividends, MUT has a yield of 4.8%.

In the current environment, some short-term cuts to company dividends are inevitable, in many cases because it would be politically inadvisable for companies to pay out while receiving government support. However, MUT’s quality portfolio holdings could reasonably be expected to return to the dividend list once economic activity resumes in the coming quarters, and in the meantime, MUT has sufficient revenue reserves to maintain its quarterly dividend payments for several quarters if need be and expects to be able to maintain its long-term record of increased annual dividends. The trust’s revenue reserve is currently c 29p per share, equivalent to c 85% of the full-year dividend, which provides a meaningful income cushion over coming quarters. Option writing is used as a source of additional revenue, to supplement income generated by the investment process.

Peer group comparison

MUT is a member of the Association of Investment Companies’ (AIC) UK Equity Income sector, which has 24 members. Its recent strong performance has ensured that its ranking within this sector continues to improve. Exhibit 11 shows that as at 4 May 2020, the trust now sits in the top three performers over one and three years, and the top four over five years on a total return NAV basis, and it is ranked fifth over 10 years, compared to 13th only six months previously. While none of the members of the peer group has escaped absolute losses during the recent sharp market sell-off, MUT’s return fell by 8.5%, a significantly smaller loss than the average return of -20.3% across the sector. The trust has recorded positive absolute returns over five and 10 years and is broadly flat over three years.

Exhibit 11 also shows that MUT’s ongoing charges are below the sector average and, in common with all but one of its peers, it does not charge a performance fee. Its discount is wider than the average of 5.1%, although several of MUT’s peers are trading at a premium to NAV. In common with most of its peers, MUT uses some net gearing, although less than average, while its dividend yield is somewhat below average, mainly due to the strong performance of its share price.

Exhibit 11: UK Equity Income peer group as at 5 May 2020*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Ongoing
charge

Perf.
fee

Discount
(cum-fair)

Net
gearing

Dividend
yield

Murray Income Trust

476.0

(8.5)

(0.3)

15.9

97.8

0.7

No

(6.7)

107

4.8

Aberdeen Standard Equity Inc Trust

133.6

(30.1)

(26.9)

(17.7)

54.5

0.9

No

(9.8)

110

7.8

BlackRock Income and Growth

38.0

(15.9)

(11.3)

2.1

63.6

1.1

No

1.0

102

4.3

BMO Capital & Income

267.2

(21.9)

(12.6)

9.2

74.3

0.6

No

2.2

108

4.6

BMO UK High Income Units

100.0

(17.2)

(15.2)

(2.4)

64.9

1.0

No

(4.7)

105

5.0

Chelverton UK Dividend Trust

25.0

(38.6)

(42.1)

(20.8)

115.4

2.0

No

(1.5)

169

10.1

City of London

1,395.7

(19.2)

(12.5)

(1.0)

93.7

0.4

No

4.7

111

5.7

Diverse Income Trust

291.3

(7.2)

(4.3)

20.6

--

1.2

No

(10.6)

100

4.7

Dunedin Income Growth

364.5

(7.2)

2.2

12.6

95.0

0.6

No

(6.3)

109

5.2

Edinburgh Investment Trust

778.2

(25.2)

(28.7)

(14.6)

91.8

0.6

No

(12.6)

110

6.4

Finsbury Growth & Income

1,661.2

(10.8)

14.8

45.1

246.6

0.7

No

0.5

101

2.2

Invesco Income Growth

130.6

(17.7)

(16.0)

(4.0)

86.6

0.7

No

(13.4)

104

5.3

Investment Company

12.9

(13.6)

(5.2)

(2.5)

73.8

2.4

No

(8.3)

100

4.5

JPMorgan Claverhouse

319.8

(22.6)

(16.5)

(2.4)

68.8

0.7

No

3.4

105

5.3

JPMorgan Elect Managed Income

69.5

(19.6)

(15.8)

(5.2)

67.9

0.9

No

(1.9)

100

5.5

Law Debenture Corporation

580.3

(19.5)

(11.6)

3.0

97.1

0.3

No

(3.1)

122

5.3

Lowland

252.4

(29.9)

(31.1)

(18.1)

91.6

0.6

Yes

(6.0)

117

6.4

Merchants Trust

435.3

(23.2)

(15.5)

(8.0)

67.1

0.6

No

0.3

118

7.4

Perpetual Income & Growth

462.9

(31.0)

(35.2)

(28.8)

55.5

0.7

No

(13.7)

116

6.9

Schroder Income Growth

163.5

(20.8)

(15.5)

(4.5)

81.6

0.9

No

2.8

112

5.3

Shires Income

67.2

(14.7)

(7.5)

7.4

102.0

1.4

No

(1.9)

123

6.0

Temple Bar

478.8

(40.6)

(33.2)

(25.6)

37.3

0.5

No

(9.5)

100

7.2

Troy Income & Growth

243.8

(8.7)

(1.6)

16.2

111.0

0.9

No

1.9

100

3.9

Value And Income

75.6

(24.0)

(19.5)

(10.0)

53.1

1.3

No

(28.6)

141

7.3

Sector average (24 funds)

367.6

(20.3)

(15.0)

(1.4)

86.6

0.9

(5.1)

112

5.7

MUT rank in sector

6

3

3

4

5

16

16

14

18

Source: Morningstar, Edison Investment Research. Note: *Performance to 4 May 2020 based on cum-fair NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).


The board

MUT’s board comprises six independent, non-executive directors. It is chaired by Neil Rogan, who joined the board in 2013 and assumed his current role in 2017. Jean Park was appointed in 2012 and became the senior independent director in 2018. Donald Cameron, MSP, also joined in 2012. The trust appointed Peter Tait in November 2017, and Stephanie Eastment, who chairs the audit committee, in August 2018. Merryn Somerset Webb became a director in August 2019. Between them, the directors have professional experience in accountancy, law, insurance, investment management and personal financial journalism.

General disclaimer and copyright

This report has been commissioned by Murray Income Trust and prepared and issued by Edison, in consideration of a fee payable by Murray Income Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Murray Income Trust and prepared and issued by Edison, in consideration of a fee payable by Murray Income Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues