Murray International Trust — Things looking good for MYI’s shareholders

Murray International Trust (LSE: MYI)

Last close As at 18/05/2024

GBP2.57

0.50 (0.19%)

Market capitalisation

GBP1,577m

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Research: Investment Companies

Murray International Trust — Things looking good for MYI’s shareholders

Murray International Trust (MYI) is managed by members of abrdn’s global equity team, Bruce Stout (lead manager), Martin Connaghan and Samantha Fitzpatrick. Things are progressing well for the trust, which meaningfully outperformed its global reference index in FY22. MYI’s income during the period exceeded the managers’ expectations and the proposed annual dividend was c 1.1x covered. Performance has been enhanced by portfolio activity undertaken during the global pandemic, due to successful stock selection and a further asset allocation shift into equities from fixed income securities. The managers are confident that MYI’s portfolio of high-quality assets has the potential to perform relatively well in an environment of higher interest rates and anticipated lower equity returns. To increase liquidity, there is a proposed five-for-one share price split.

Melanie Jenner

Written by

Mel Jenner

Director, Investment Trusts

Murray-International-Trust_resized

Investment Companies

Murray International Trust

Things looking good for MYI’s shareholders

Investment trusts
Global equities/debt

16 March 2023

Price

1,300p

Market cap

£1,625m

Total assets

£1,750m

NAV*

1,321.8p

Discount to NAV

1.6%

*Including income. At 14 March 2023.

Yield

4.3%

Ordinary shares in issue

125.0m

Code/ISIN

MYI/GB0006111909

Primary exchange

LSE

AIC sector

Global equity income

Financial year end

31 December

52-week high/low

1,368.0p

1,152.0p

NAV* high/low

1,378.7p

1,232.1p

*Including income

Net gearing*

8.8%

*At 10 March 2023.

Fund objective

Murray International Trust aims to achieve an above-average dividend yield with long-term growth in dividends and capital ahead of inflation, by investing principally in global equities. Its reference is an all-world index (total return).

Bull points

Unconstrained approach – ability to source interesting opportunities anywhere in the world.

Progressive dividend policy and attractive yield.

Well-resourced investment team, which includes ESG specialists.

Bear points

Large exposure to emerging markets, which can be more volatile than developed regions.

Performance has lagged the reference index over the longer term.

FY22 annual dividend growth lagged the UK inflation rate.

Analyst

Mel Jenner

+44 (0)20 3077 5700

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

Murray International Trust (MYI) is managed by members of abrdn’s global equity team, Bruce Stout (lead manager), Martin Connaghan and Samantha Fitzpatrick. Things are progressing well for the trust, which meaningfully outperformed its global reference index in FY22. MYI’s income during the period exceeded the managers’ expectations and the proposed annual dividend was c 1.1x covered. Performance has been enhanced by portfolio activity undertaken during the global pandemic, due to successful stock selection and a further asset allocation shift into equities from fixed income securities. The managers are confident that MYI’s portfolio of high-quality assets has the potential to perform relatively well in an environment of higher interest rates and anticipated lower equity returns. To increase liquidity, there is a proposed five-for-one share price split.

NAV outperformance versus the reference index (one year to end-Feb 2023)

Source: Refinitiv, Edison Investment Research

The analyst’s view

MYI offers investors a diversified fund with prospects for both capital and income growth. Diversification is important, as data from abrdn show that over the last decade, the highest market annual returns (in sterling terms) have come from a variety of regions: the United States (five years), which until 2022 had benefited from the strong performance of its major technology companies, Latin America (three years), and Japan and Asia Pacific ex-Japan (one year each). The trust’s managers seek high-quality, cash-generative businesses, with high returns and above-average dividend yields, that can grow regardless of the economic environment. As quality companies are often fully priced, the managers look for mispriced assets; they keep an open mind and take advantage of abrdn’s global reach. MYI’s portfolio has defensive qualities; data from abrdn show that over the 20 years to end-2022, the trust’s relative performance versus global stocks in down markets (85 months) was +0.79pp, while in up markets (155 months) it was -0.24pp.

Valuation higher than historical averages

MYI’s 1.6% discount to cum-income NAV is narrower than the 1.4% to 2.9% range of average discounts over the last one, three and five years. The trust has a commendable dividend track record as its annual distributions have grown for the last 18 consecutive years. Based on its current share price, MYI offers a 4.3% yield.

Market outlook: Uncertain backdrop, caution warranted

As shown in Exhibit 1 (left-hand side) below, over the last decade, global stocks have performed considerably better than the UK market, including an above-average level of volatility in 2022. The uncertain backdrop has continued into 2023, as daily stock market moves appear to be driven by investors’ interpretation of US Federal Reserve comments regarding the direction and magnitude of interest rates. While year-on-year inflation data points have moderated, a tight labour force and rising wages could mean that interest rates remain higher for longer.

Although equity valuations have moderated (Exhibit 1, right-hand side), with the Datastream World Index now trading at a discount to its 10-year average on a forward P/E basis, caution is warranted. Unlike in emerging markets, developed market central banks and corporates are not used to dealing with sustained periods of high inflation. Hence, earnings estimates may prove to be too optimistic. If this is the case, then valuation multiples are less attractive than they appear.

Given that stock market volatility could continue, global investors may be best served by taking a longer-term perspective, seeking quality companies with good growth prospects, despite the uncertain economic backdrop, and that are trading on relatively undemanding valuations.

Exhibit 1: Market performance and valuations (last 10 years)

Performance of UK and world indices (£ adjusted)

Datastream indices forward P/E valuations (x)

 

Last

High

Low

10-year
average

Last as % of
average

US

17.6

23.4

13.7

17.7

99

Europe

12.5

17.7

10.9

14.4

87

UK

10.7

15.7

9.4

13.5

80

Japan

13.2

18.5

11.1

14.3

92

Emerging markets

11.5

16.6

11.2

13.1

88

World

14.5

19.9

12.5

15.4

94

Source: Refinitiv, Edison Investment Research. Note: Valuation data at 15 March 2023.

The fund manager: abrdn

The manager’s view: Higher inflation and lower equity returns

Stout believes that the most important thing to consider is the realistic expectations for MYI’s portfolio companies in terms of their earnings, dividends and valuations, given the changing economic dynamics during the last few quarters of rising inflation.

The manager highlights that US money supply has increased over the last 40 years, and accelerated during the global pandemic due to transfer payments. He comments that the Federal Reserve has printed money to bail out a series of crises, which has generated inflation in asset prices due to the sheer weight of money. Stout believes that if central banks are serious about bringing inflation down, the bond buyers of last resort are now gone, and bond yields are likely to remain higher than they have been over the last decade. He suggests that 4–5% annual equity total returns are more likely than the double-digit levels seen in several recent years, and valuation multiples should moderate (they compressed in 2022 as interest rates rose). The manager comments that with higher rates the asset bubble has been lanced, and he anticipates a raft of earnings estimate downgrades and earnings declines.

Stout cautions that rising interest rates and falling corporate profits led to three years of accelerating stock market losses between 2000 and 2002. He says that in the UK, investors are focusing on peak interest rates, but there is no evidence that inflation will return to the Bank of England’s 2% target. The manager comments that wages have started to rise due to the tight labour market, which is being exacerbated by a declining participation rate. He expects inflation to be more like 4–5% than 2%, explaining that as wages start to rise, it is difficult to bring overall inflation down. If inflation is higher for longer, Stout opines that equities will face competition for investors’ capital. He explains that emerging market central banks pre-empted inflation as they are used to dealing with rising prices, unlike in developed markets, and were raising interest rates in 2021. As an example, the Brazilian base rate has increased from 2.00% to 13.75% since 2021, and inflation has halved from c 12% in April 2022 to c 6% now, so interest rates could decline, which would be positive for growth and company valuations.

Current portfolio positioning

There are some small data discrepancies in Exhibit 2 due to rounding. However, in terms of MYI’s geographic exposure, over the 12 months to end-January 2023, there is a notably higher weighting in Europe ex-UK equities, which was broadly offset by lower allocations to Asia Pacific ex-Japan, UK and North American equities. Exposure to emerging market debt continues to decline.

Exhibit 2: Portfolio breakdown by security type and geography (% unless stated)

Portfolio end-January 2023

Portfolio end-January 2022

Change (pp)

Equities

North America

24.9

26.5

(1.6)

Asia Pacific ex-Japan

24.9

28.4

(3.5)

Europe ex-UK

24.4

16.8

7.6

Latin America & EM

13.0

10.9

2.1

UK

3.6

5.3

(1.7)

Africa

0.7

1.0

(0.3)

 

91.5

88.9

2.6

Bonds/cash

 

 

 

Latin America & EM

2.6

3.7

(1.1)

Asia Pacific ex-Japan

2.6

2.9

(0.3)

Africa

0.8

0.9

(0.1)

Europe ex-UK

0.4

0.4

0.0

UK

0.3

0.4

(0.1)

Cash

1.8

2.4

(0.6)

 

8.5

10.7

(2.2)

Total

 

 

 

Asia Pacific ex-Japan

27.5

31.3

(3.8)

North America

24.9

26.5

(1.6)

Europe ex-UK

24.8

17.2

7.6

Latin America & EM

15.6

14.6

1.0

UK

3.9

5.7

(1.8)

Africa

1.5

1.9

(0.4)

Cash

1.8

2.4

(0.6)

100.0

100.0

 

Source: MYI, Edison Investment Research. Note: EM is emerging markets. Numbers subject to rounding.

MYI is required to hold between 45 and 150 positions; at end-January, there were 52 equities and 17 fixed income securities. The top 10 holdings made up 30.1% of the portfolio, which was modestly lower than 31.2% a year earlier; eight positions were common to both periods.

Stout highlights that the top 10 list is diversified by sector and geography, and there is a barbell approach between companies with high dividend yields, including SQM and Philip Morris, and those with lower yields but good dividend growth potential, such as Broadcom.

Exhibit 3: Top 10 holdings (at 31 January 2023)

Company

Country

Sector

Portfolio weight, %

31 Jan 2023

31 Jan 2022*

Grupo Aeroportuario del Sureste (ASUR)

Mexico

Industrials

4.8

3.9

Taiwan Semiconductor Manufacturing Co (TSMC)

Taiwan

Technology

3.4

4.8

Philip Morris

US

Consumer staples

3.2

3.0

Broadcom

US

Technology

3.1

2.9

AbbVie

US

Healthcare

2.9

2.6

TotalEnergies

France

Energy

2.7

2.4

Oversea-Chinese Banking

Singapore

Financials

2.6

N/A

Sociedad Química y Minera de Chile (SQM)

Chile

Basic materials

2.5

N/A

Unilever

UK

Consumer staples

2.5

2.5

Samsung Electronics

South Korea

Technology

2.4

2.3

Top 10 (% of portfolio)

30.1

31.2

Source: MYI, Edison Investment Research. Note: *N/A where not in end-January 2022 top 10.

We discussed MYI’s H122 portfolio activity in our September 2022 review and in this report Fitzpatrick highlights the main H222 transactions. US major pharma company Merck & Co was added to the fund in August 2022; it is a global leader in immunology and generates strong levels of cash flow. Cancer medicine Keytruda is 35% of the company’s revenues and goes off patent in 2028. Hence, planning for the future, Merck is undertaking partnerships and selling its lower-growth businesses, such as women’s health. Gardasil (a widely used human papilloma virus vaccine) had capacity constraints, but these have now eased. The company’s animal health business is viewed as an attractive asset, which the manager suggests could be a valuable spin-off for Merck. It was added to MYI’s portfolio on share price weakness during a period when healthcare stocks were out of favour; since then Merck’s shares have appreciated considerably.

During H222, there were three complete disposals from the fund: Castrol India, which is disadvantaged by higher energy input costs; an América Móvil Mexican corporate bond, which had delivered strong capital growth and income over its five and a half year holding period; and a modest position in Indonesian cement producer Indocement Tunggal Prakarsa.

Performance: Outperforming over one and three years

Exhibit 4: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

Index*
(%)

CBOE UK All Companies (%)

MSCI World ex-UK (%)

MSCI AC World (%)

28/02/19

(0.5)

(1.7)

2.9

1.6

3.3

3.3

29/02/20

(5.8)

1.6

4.8

(2.1)

9.4

8.8

28/02/21

8.9

9.2

15.8

2.8

20.5

19.6

28/02/22

14.2

16.5

12.5

16.7

12.5

12.8

28/02/23

17.1

12.3

1.9

8.2

1.9

2.2

Source: Refinitiv. Note: All % on a total return basis in pounds sterling. *Index is 40% UK and 60% World ex-UK until 27 April 2020 and a broad global index thereafter.

In FY22 (ending 31 December), MYI meaningfully outperformed the reference index. Its NAV and share price total returns of +8.8% and +20.6% respectively compared with the index’s -7.3% total return. At the stock level, the largest positive contributors to the trust’s relative performance were SQM (+1.8pp), Grupo Aeroportuario del Sureste (ASUR) (+1.7pp) and AbbVie (+1.0pp), while the largest detractors were GlobalWafers (-1.8pp), Taiwan Semiconductor Manufacturing Co (TSMC) (0.5pp) and Samsung Electronics (-0.4pp).

The trust’s best geographic contributors to absolute NAV performance in FY22 were Latin American equities (+38.0%), UK equities (+36.6%) and North American equities (+13.9%), while the worst was Africa and Middle East (just one stock, -20.0%). Sector performance was led by basic materials (+55.7%), energy (+41.4%) and healthcare (+24.2%), with technology (-22.1%), utilities (-19.2%) and telecoms (-5.5%) generating disappointing returns.

Exhibit 5: Investment trust performance to 28 February 2023

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.

Looking at MYI’s 20-year track record to end-2022, data from abrdn show that the trust has generated average annual NAV total returns of +11.0% compared with +9.4% for the world market. MYI’s globally diversified approach has been beneficial as, over the period, the largest annual NAV total returns were from Latin American equities (+19.1%) and Asia Pacific ex-Japan equities (+14.9%). The performance of UK and Japanese equities have lagged with annual total returns of +3.7% and +5.3%, respectively. MYI’s NAV has outperformed the reference index since Q322 (Exhibit 7). As shown in Exhibit 6, its positive relative returns are gaining momentum, as the trust is ahead of the index over the last one, three and six months, and one and three years in both NAV and share price terms, while its NAV is broadly in line over the last five years.

Exhibit 6: 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 index

1.5

2.2

9.0

15.0

9.8

(4.5)

(25.1)

NAV relative to index

1.6

3.0

7.6

10.3

7.7

(0.1)

(19.5)

Price relative to CBOE UK All Companies

(1.6)

(4.1)

(1.2)

8.2

12.2

5.7

(1.7)

NAV relative to CBOE UK All Companies

(1.5)

(3.3)

(2.5)

3.8

10.1

10.5

5.7

Price relative to MSCI World ex-UK

1.5

2.2

9.0

15.0

5.5

(12.5)

(37.8)

NAV relative to MSCI World ex-UK

1.6

3.0

7.6

10.3

3.5

(8.5)

(33.1)

Price relative to MSCI AC World

1.4

2.0

8.6

14.6

5.7

(11.8)

(35.9)

NAV relative to MSCI AC World

1.4

2.8

7.2

9.9

3.7

(7.8)

(31.1)

Source: Refinitiv, Edison Investment Research. Note: Data to end-February 2023. Geometric calculation.

Exhibit 7: NAV total return performance relative to index over three years

Source: Refinitiv, Edison Investment Research

Peer group comparison

Exhibit 8 shows the six largest companies in the AIC Global Equity Income sector; they employ a range of different strategies. MYI is the biggest fund and is differentiated by its c 45% exposure to emerging markets and its weighting in fixed income securities. The trust’s NAV total return is above average over the last 12 months, ranking second and lower than the mean over the other periods shown. MYI has second highest valuation in the selected peer group, where no funds are trading at a premium. It has the lowest ongoing charge and, in line with its peers, no performance fee is payable. The trust currently has the joint highest level of gearing and, along with another fund, the highest dividend yield, which is 80bp above the mean.

Exhibit 8: Selected peer group at 15 March 2023*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield (%)

Murray International

1,625.2

8.3

54.8

39.3

83.9

(0.4)

0.5

No

110

4.3

Henderson International Income

341.0

6.8

50.1

34.4

127.8

(3.9)

0.8

No

102

4.3

Invesco Select Global Equity Income

60.7

16.6

82.2

52.0

165.5

(6.2)

0.8

No

106

2.9

JPMorgan Global Growth & Income

1,419.4

7.5

70.7

67.7

209.8

(0.2)

0.6

No

101

3.9

Scottish American

871.4

7.5

53.3

57.4

158.1

(2.6)

0.6

No

110

2.8

Securities Trust of Scotland

208.6

0.6

40.8

42.3

106.2

(2.5)

0.9

No

107

2.8

Average

754.4

7.9

58.6

48.8

141.9

(2.6)

0.7

106

3.5

MYI rank in sector (6 funds)

1

2

3

5

6

2

1

1=

1=

Source: Morningstar, Edison Investment Research. Note: *Performance at 14 March 2023 based on ex-par NAV. TR, total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Dividends: Progressive policy

In FY22, MYI’s revenue of 60.1p per share was 16.3% higher than 51.7p per share in FY21, and is now higher than pre-COVID-19 levels. The board has proposed a final dividend of 20.0p per share, which would mean a 56.0p per share annual dividend in respect of FY22 (c 1.1x covered), which is a 1.8% increase compared with 55.0p per share in FY21. The trust now has an 18-year record of consecutive annual dividend increases. At end-FY22, MYI had £69.2m of revenue reserves, which is equivalent to c 1.0x the latest annual payment. Since 2021, the managers can write covered put and call options on underlying portfolio investments and employ stock lending to generate a modestly higher level of income.

Exhibit 9: Dividend history since FY17

Source: Bloomberg, Edison Investment Research

The managers were very pleased with the quality of the trust’s higher income in FY22, and that, once again, revenue could be added to reserves to be utilised in future years when income is lower. They are mindful that MYI’s income generation could be more difficult if bond yields are higher for longer than expected. However, the trust’s portfolio is more diversified now compared with 20 years ago. If there is a developed market recession and dividends come under pressure, MYI has a tailwind from its broad range of portfolio income.

Valuation: Currently heading towards NAV

MYI’s 1.6% discount to cum-income NAV compares with a range of a 2.1% premium to a 9.3% discount over the last 12 months. Over the last one, three and five years the trust’s average discounts are 2.8%, 2.9% and 1.4%, respectively, while over the last decade MYI’s shares traded at an average 0.8% premium.

Exhibit 10: Discount over three years (%)

Exhibit 11: Buybacks and issuance

Source: Refinitiv, Edison Investment Research

Source: Morningstar, Edison Investment Research

Exhibit 10: Discount over three years (%)

Source: Refinitiv, Edison Investment Research

Exhibit 11: Buybacks and issuance

Source: Morningstar, Edison Investment Research

Renewed annually, the board has the authority to issue up to 10% and repurchase up to 14.99% of MYI’s issued share capital. Aiming to reduce volatility in the trust’s valuation and make a small positive contribution to the NAV, the board repurchases shares if they trade at a persistent discount to ex-income NAV, while issuing shares if they trade at a persistent premium to cum-income NAV. During FY22, c 0.8m shares were repurchased and held in treasury, which was c 0.7% of MYI’s share base.

Fund profile: Differentiated geographic exposure

Launched in December 1907, MYI is one of the oldest UK investment trusts; it is listed on the Main Market of the London Stock Exchange. Bruce Stout, a senior investment director in abrdn’s global equity team, has been the trust’s lead manager since 2004, although he has been directly involved with MYI since 1992. He works closely with investment directors Martin Connaghan and Samantha Fitzpatrick. The team aims to generate long-term capital growth (while preserving capital during periods of stock market weakness) and an above-average dividend yield from a globally diversified portfolio of equities and fixed-income securities. Around 45% of the fund is invested in emerging markets as the managers believe these regions offer the prospect of higher economic growth alongside relatively attractive company valuations.

MYI’s performance is measured against an all-world reference index; before 27 April 2020 it was benchmarked against a composite measure (40% UK and 60% world ex-UK). The trust’s investment objective was also changed on this date, aiming to achieve an above-average dividend yield, with long-term growth in dividends and capital ahead of inflation, by investing principally in global equities (MYI’s prior aim was to achieve a total return greater than its benchmark by investing predominantly in equities worldwide). The board believes the different wording gives shareholders a clearer picture of what the trust is trying to deliver.

There are no geographic or sector limits on portfolio construction, but at the time of investment, a maximum 5% of the fund is permitted in a single security, although in practice this percentage is much lower. From time to time, the trust may invest in equity-related securities such as depositary receipts, preference shares or unlisted companies, and derivatives are permitted for efficient portfolio management. Its currency exposure is unhedged. Gearing of up to 30% of NAV is permitted (in normal market conditions).

Investment process: Bottom-up stock selection

Stocks are selected on a bottom-up basis, so sector, regional and country allocations are a result of these decisions. abrdn employs a long-term approach, focusing on companies that its research analysts identify as high quality. 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 (UK, Europe, Asia Pacific ex-Japan, North America, Japan and emerging markets) containing all companies with buy-and-hold recommendations, which provides the trust’s investment universe.

For MYI’s fixed-income holdings, the process for selecting and monitoring both sovereign and corporate bonds follows the same methodology used for equity investment. Portfolio geographic and sector exposures are a function of each security’s relative valuation and prospects. Within the portfolio there are typically 60–80 companies across the market-cap spectrum with position sizes of between c 1% and c 5%. Equity holdings are generally initiated at around 1.0% to 1.5% of the fund, while initial fixed income positions tend to be smaller. If a holding reaches 5% of the portfolio, it is trimmed within 30 days and the manager will sell a holding within 30 days if it is no longer rated buy or hold on abrdn’s global coverage list, subject to the timing of dividend payments.

MYI’s approach to ESG

Although ESG and climate-related factors are not the overriding criteria in relation to the managers’ portfolio decisions, they do form a very important part of the investment process and have done so for more than 30 years for three key reasons:

Financial returns – ESG factors can be financially material; companies that take their responsibilities seriously tend to outperform those that do not.

Fuller insight – systematically assessing a company’s ESG risks and opportunities alongside other financial metrics leads to better investment decisions.

Corporate advancement – informed and constructive engagement helps foster higher-quality companies, thereby protecting and enhancing the value of MYI’s investments.

The managers can draw on the resources of abrdn’s ESG equity analysts and central ESG investment team (more than 20 experienced specialists) who collaborate to generate a deep understanding of the ESG risks and opportunities associated with each company analysed.

Climate change risks are vast and becoming increasingly financially material for many of abrdn’s investments, not only in the high-emitting sectors, such as energy, utilities and transportation, but also along the supply chain, for providers of finance and those reliant on agricultural outputs and water. Companies that successfully manage climate change risks are expected to perform better over the long term.

A systematic and globally applied approach to evaluating stocks allows abrdn to compare companies consistently on their ESG credentials, both regionally and against their peer group. Findings from research and company meetings are captured in formal research notes. All firms analysed are allocated an ESG rating between 1 and 5, where 1 is best in class; 2, leader; 3, average; 4, below average; and 5, laggard. Once abrdn invests in a company, it is committed to helping that firm maintain or raise its ESG standards further. Regular engagement is seen as a necessary fulfilment of its duty as a responsible steward of clients’ assets and provides an opportunity to share examples of best practice seen in other companies.

Gearing

MYI has total borrowings of £200m with The Royal Bank of Scotland International (RBSI): a £50m 10-year senior unsecured loan note at an all-in annualised interest rate of 2.240% expiring on 31 May 2031 and three unsecured fixed-rate term loans (£60m at 2.830% expiring on 31 May 2037, £60m at 2.328% expiring on 31 May 2023 and £30m at 2.250% expiring on 16 May 2024). The trust also has a £150m facility available for drawdown, which the board intends to use to repay the RBSI debt as it falls due over the coming years. MYI’s board is considering options for the loan that expires in May 2023. At 10 March 2023, net gearing was 8.8%.

Fees and charges

Since 1 January 2022, MYI has a reduced tiered fee structure of 0.5% of NAV up to £500m and 0.4% of NAV above this level (previously 0.5% of NAV up to £1.2bn and 0.425% of NAV above £1.2bn). It is split 30:70 between the revenue and capital accounts respectively. In FY22, the trust’s ongoing charge was 0.52%, which was 7bp lower than 0.59% in FY21, helped by the lower tiered fee structure.

Capital structure

Exhibit 12: Major shareholders

Exhibit 13: Average daily volume

Source: abrdn. Note: At 31 January 2023.

Source: Refinitiv. Note: 12 months to 15 March 2023.

Exhibit 12: Major shareholders

Source: abrdn. Note: At 31 January 2023.

Exhibit 13: Average daily volume

Source: Refinitiv. Note: 12 months to 15 March 2023.

MYI is a conventional investment trust with one class of share; there are 125.0m ordinary shares in issue, with a further 4.4m shares held in treasury, and its average daily trading volume over the last 12 months is c 157k shares.

The board

Exhibit 14: MYI’s board of directors at the end of FY22

Board member

Date of appointment

Remuneration in FY22

Shareholding at 2 March 2023

David Hardie (chairman)*

1 May 2014

£48.000

16,317

Alexandra Mackesy

1 May 2016

£32,000

3,315

Claire Binyon

1 May 2018

£34,000

1,255

Nicholas Melhuish

1 May 2021

£28,000

3,502

Virginia Holmes

22 June 2022

£14,700

2,000

Source: MYI. Note: *Appointed as interim chairman in August 2021 and chairman in October 2021.

David Hardie will step down from the board on 31 December 2023, and will be replaced as chair by Virginia Holmes. Two new board appointments are expected in coming months.

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London │ New York │ Frankfurt

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General disclaimer and copyright

This report has been commissioned by Murray International Trust and prepared and issued by Edison, in consideration of a fee payable by Murray International Trust. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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