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46. Uncovering Trusts – Murray International Trust (MYI): A well-established global income trust
103 Plays7 days ago
In this episode, our director of content, investment trusts Milosz Papst talks about Murray International. This is our first podcast focusing on this large, well-established fund, so he starts by providing an introduction to the company, before highlighting how it differs from its peers in the AIC Global Equity Income sector. Murray International has a notable below-market weight in the US and a meaningful allocation to emerging markets. Discussion then moves onto the investment process, which features Aberdeen’s focus on quality and value, and input from its regional investment teams. He then provides more information about the portfolio, which is broadly diversified by geography and sector. To bring some more colour, he gives some examples of recent transactions, where portfolio activity has been higher than average as Murray International’s managers have found increased opportunities in a volatile market. Attention then turns to the trust’s performance and the change in the company’s reference measure to what is a more relevant MSCI ACWI High Dividend Yield Index given Murray International’s emphasis on income and dividend growth. Papst then highlights the trust’s competitive fee structure and its valuation, before wrapping up with summary of the key takeaways of the Murray International story.
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About ‘Uncovering Trusts’
'Uncovering Trusts': is a podcast run by Edison analysts released every two weeks. Subscribe to hear analyst interviews on how investment trusts maximise returns while managing risks for investors.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
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Transcript
00:00:00
Speaker
See you.
Introduction to the Podcast and Guest
00:00:06
Speaker
Welcome to Uncovering Trust, a podcast by Edison Group. I am your host, Neil Shah, market strategist at Edison, and today I'm joined by Milos Papps, director of investment company content at Edison, who is going to talk about Murray International Trust, ticker MYI. Milos, thank you for joining us today.
00:00:23
Speaker
Thanks, Neil. Good to be here.
Overview of the Murray International Trust
00:00:26
Speaker
This is the first time we've featured Murray International in our podcast series, so let us start with an introduction to the trust. Yes, of course. um Having launched in December 1907, International is one of the oldest UK investment trusts and is listed on the main market of the London Stock Exchange. It is managed by two senior investment directors, Adabudin, Martin Conaghan and Samantha Fitzpatrick. um They aim to deliver an above average dividend yield with um long-term growth in dividends and capital ahead of UK inflation by investing in a diversified portfolio of um primarily global equities.
00:01:06
Speaker
In the 20 years to the end of 2024, the Trust achieved real, so above inflation, dividend growth in 15 out of 20 years with a 7% compound annual growth rate. and total NAV growth exceeded inflation in 14 out of 20 years with a 10% compound annual growth rate.
Investment Constraints and Strategies
00:01:25
Speaker
um There are no geographical sector limits on portfolio construction, but at the time of investment, a maximum 5% of the fund is so permitted in a single security, although ah in practice this percentage is much lower.
00:01:39
Speaker
The trust's ah currency exposure is unhatched and the gearing of up to 30% of NAV is permitted in normal market conditions. Okay, so and how is Murray different from its peers?
00:01:51
Speaker
Yes, so there are five funds in the AIC global equity income sector, um of which the trust is the second largest. um The trust has by far the lowest US exposure versus its peers, while while it has the highest allocation of around 30% to emerging markets, including a meaningful weighting in Latin America.
00:02:12
Speaker
um Martin and Samantha um believe that emerging markets offer the prospect of higher economic growth than developed markets, along with relatively attractive company e valuations.
00:02:23
Speaker
The trust has a small fixed income exposure via um investment in sovereign corporate bonds. Also, unlike most of its peers, the trust pays dividends purely out of income without dipping into capital reserves.
00:02:37
Speaker
Okay, so now let's move on to their investment process.
Stock Selection Approach and Portfolio Diversification
00:02:41
Speaker
Sure. Stocks are selected on a bottom-up basis. So um sector, regional, and country allocations are the result of these decisions.
00:02:50
Speaker
Aberdeen employs a long-term approach focusing on companies that its research analysts identify as high quality. A company is 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.
00:03:14
Speaker
Company valuations are considered 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.
00:03:31
Speaker
Aberdeen uses a global coverage list that is constructed by each of the specialist regional analyst teams, um so developed markets, Asia Pacific, pacific ex Japan, Japan and emerging markets, containing all companies with buy and hold recommendations, which provides the trust's investment universe.
00:03:51
Speaker
ah Portfolio, geographic and sector exposures are a function of each security's relative valuation prospects. Within the portfolio, there are companies across the market cap spectrum with position sizes of between 1% and 5%. If a holding reaches 5% of the portfolio, it is trimmed within 30 days and the managers will sell a holding within 30 days if it is no longer on Aberdeen's global coverage list, subject to the timing of dividend payments.
00:04:20
Speaker
Okay, so you've given us an overview of how stocks are selected. Now, perhaps we can actually get into the portfolio. Can you give us some more information about the portfolio? Yes, of course. um The trust is a broadly diversified global fund.
00:04:34
Speaker
The importance of diversification is illustrated by the regional total return performance of the former Global Equity Reference Index over the last 20 years. Over this period, the region that has led for the greatest number of years, which some find some may find surprising, is Latin America.
00:04:51
Speaker
Eight, follow followed by the US. Seven, Japan, two, Asia Pacific is Japan, two, Europe, XUK, one, and the UK, none. um The Trust portfolio at the end of September 2025 had 57 positions, 50 equities and seven fixed income.
00:05:09
Speaker
The Trust's top 10 holdings made up around 30% of the portfolio, which is diversified by geography and sector with a mixture of high-reeling stocks, such as Zurich Insurance, and companies with small yields but growing dividends, including TSMC.
00:05:23
Speaker
ah The managers are continuing to divest the trust's fixed income investments when opportunities become available. and There have been no new fixed income holdings for more than a decade.
00:05:35
Speaker
The trust has no exposure to the magnificent seven US mega cap technology stocks as these companies are not a natural fit with the trust mandate as they would contribute a very low or zero level of income.
00:05:48
Speaker
Okay, so moving on. Now seems like a good time to hear about some of the recent portfolio activity.
Recent Activities and Strategic Shifts
00:05:55
Speaker
Okay. um I will focus on the last reporting period, which is H1 2025.
00:06:01
Speaker
While the managers invest for long-term, Sharpe moves in stock prices during the period provided several opportunities. There were three new purchases and seven complete disposals, along with a selection of top-ups and top-slicing of portfolio holdings. um The new holdings were Infosys, which is a leading Indian-based IT services firm offering digital digital transformation and consulting services in areas including data analytics and AI.
00:06:27
Speaker
This holding diversifies the trust's technology exposure away from semiconductors. Infosys is a high-quality growth company with net cash on the balance sheet and a cost-control program which could lead to margin expansion.
00:06:40
Speaker
It has strong cash flow generation, 85% of which is expected to be returned to shareholders up until 2029. The company's dividend has compounded at an annual rate of 23% over the last 20 years, and it offers a relatively high yield within the technology sector.
00:06:57
Speaker
Intesa Sa Paolo is the leading Italian domestic bank operating in a fragmented market but generating a relatively high return on equity and has opportunities for long growth. The well-established management team has achieved efficiencies through consolidation and scale and has expanded into high growth areas such as wealth management.
00:07:17
Speaker
Intesa is well capitalized with a low cost to income ratio and offers an attractive dividend yield. um Rio Tinto is a major Anglo-Australian miner, and the purchase was funded from the sale of um of the liium lithium producer SQM, as Rio has the more diverse commodity exposure.
00:07:36
Speaker
It also has a higher yield and a potentially more stable dividend. um The trust has retained an exposure to lithium via Rio's 2025 acquisition of Arcadium Lithium.
00:07:48
Speaker
ah The complete disposals were Atlas Copco due to elevated valuation and demand pressure in some of its divisions. Banco Bradesco, which was the source of funds for the purchase of Intesa San Paolo.
00:08:00
Speaker
ah China Resources Land, the investment thesis, well, did not play out. um Global waivers, which had a challenging dividend outlook, SQM, the one I just mentioned, um due to low lithium prices as strong demand for electric cars, is outweighed by but lithium industry overcapacity, along with the Mini Republic and Indonesian government bonds.
00:08:23
Speaker
um It is noteworthy that Atlas coppo Copco generated a 16.5% annual total return during the trust's 12-year holding period. ah The managers view this company as a high-quality industrial company, which they would be willing to well reconsider at a more favorable valuation.
00:08:40
Speaker
Okay. and So how about the trust performance?
Performance and Dividend Achievements
00:08:44
Speaker
Yes, so given changes in the Trust Reference Index over the years, its long-term performance is compared with the blended measure.
00:08:50
Speaker
ah Prior to the 27th of April 2000, it was a composite index, 40% UK and 60% World X UK. Then an all-country world index, and from the 1st of July 2025, the MSCI ACWI High Dividend Yield Index.
00:09:09
Speaker
I think that this high yield index should be a more relevant comparator for the Trust. The most important differences between this index and the regular MSCA All Country World Index, which is a widely used non-high yield global equity index, are a lower US weighting and considerably lower technology weighting.
00:09:28
Speaker
ah The Trust NAV has outperformed its blended reference index over the last 12 months and 5 years and is broadly in line over the last decade. Perhaps of more re relevance, the trust has outpaced the performance of the MSCI ACWI high dividend yield index over the last one, three, five and 10 years.
00:09:46
Speaker
ah The managers were encouraged by the trust's H1 2025 performance as during a volatile period in global markets, the trust outperformed its reference index and delivered on its objective of a higher than average dividend yield and real, so baffling, growth in capital income.
00:10:04
Speaker
Okay. um As it's an integral part of the Murray International story, let's move on to the trust dividend. ah Talk to me about the the dividend. Yeah, good idea. The trust has now joined the AAC's list of dividend heroes, which is a list of just 20 funds that have achieved 20 or more years of consecutive dividend growth.
00:10:25
Speaker
Martin and Samantha aim for a covered dividend, but can draw on the trust's significant revenue reserves, which are equivalent more than the last annual dividend payment to supplement the income when required.
00:10:37
Speaker
At the trust's currently officer, dividend yield around 3.8%. Okay, and what's the valuation of the trust?
Valuation and Share Management Strategies
00:10:44
Speaker
Yeah, so in keeping with many investment trusts, the discounts of the trust has generally been wider than its historical averages.
00:10:51
Speaker
There is scope for a narrow discount when investor sentiment improves, which is likely when a more certain macroeconomic environment prevails, as the trust has historically traded closer to NAV.
00:11:02
Speaker
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 come-income NAV. Okay. And before we wrap up, are there any other areas that you feel that we should cover?
00:11:23
Speaker
Well, ah fees is a topic we have not talked about yet. um The Trust has a competitive tiered fee structure with annual management fees of 0.5% of up to and of above this level.
00:11:39
Speaker
In 2025, the trust's ongoing charge was 0.51%, which is the second lowest in the AIC global equity income sector. I would just like to finish by summarizing some important points about Murray International Trust, which is a trust that aims to offer broader return for shareholders based on both income and the capital, rather than just capital appreciation. Martin and Samantha are mindful of the macroeconomic backgrounds, but are fully focused on bottom-up stock selection, seeking you know good businesses at good prices across the globe.
00:12:09
Speaker
Along with delivering on the trust dividend and capital objectives, the trust tends to provide a degree of downside protection during periods of market weakness. um Data from the company show that over the 20 years ending um on the 30th of June 2025, in the 154 months when global stock prices rose, the trust underperformed by an average 0.4% per month. But in the 86 months when stock prices fell, the trust outperformed by an average 0.84% per month.
00:12:40
Speaker
Okay, Milos, thank you so much. That's a really comprehensive rundown on this we very well-established global income trust. You've been listening to Uncovering Trusts, a podcast by the Edison Group. If you want to find out more about Murray International and other investment companies we cover, please visit www.edisondroup.com.