Transcript
Speaker: Yeah.
Speaker: Hello and welcome to Uncovering Trusts, a podcast by Edison Group. I'm your host, Liam Ibern, and today I'm joined by Milos Paps, Director of Investment Company Content at Edison, to talk about Murray International Trust, ticker MYI. Milos, as always, thank you very much for joining us.
Speaker: Thanks, Liam. Always a pleasure. um There is plenty to discuss, including a very strong 2025, new benchmark, and the Trust's continued evolution towards a more focused global equity income proposition.
Speaker: So we featured the trust in November 2025, but given the the development since then, could you perhaps start the conversation today by giving a brief introduction? Yes, absolutely. Mara International Trust is one of the oldest investment trusts in the market, having launched in December 1907. It is listed on the main market of the London Stock Exchange and managed at Aberdeen by Martin Conaghan and Samantha Fitzpatrick, both of whom are senior investment directors.
Speaker: Now, the trust's objective is to achieve an above-average dividend yield, together with long-term growth in dividends and capital ahead of inflation, principally by investing in global equities. Since July 2025, the Trust's benchmark has been the MSCA All Companies World Index High Dividend Yield Index in Sterling, which I think is a more natural comparator for Global Equity Income strategy than a broad All World Index.
Speaker: Thanks. That's a very nice introduction to kick us off. I guess my next question would be, what distinguishes MYI from other Global Equity Income Trusts? um I would highlight three points. um First, the portfolio is genuinely differentiated. um The trust has a much lower allocation to the United States than most global equity funds with no exposure to the Max 7 technology stocks and a meaningfully higher allocation to emerging markets.
Speaker: um In the latest latest fact sheet, ah North America was around one third of assets, while Asia Pacific, exs Japan and Latin America together accounted for just over 28%. That gives shareholders exposure to income and dividend growth opportunities that are not simply, you know, a mirror of the global index.
Speaker: Second, the dividend policy is important. The trust pays dividends from income and, where appropriate, revenue reserves. um So it does not use capital to fund distributions, which I believe is a meaningful distinction from many peers. And third, there is the trust's long-term emphasis on resilience. The managers are not trying to maximize exposure to the fastest growing parts of the market.
Speaker: um They are trying to build a portfolio of good businesses at good prices with the ability to generate income. grow dividends and preserve capital during weaker markets.
Speaker: So given what they're trying to build, how do Martin and Samantha actually go about constructing the portfolio? Yeah, so the process is bottom-up and research-driven, with the starting point being Aberdeen's global research platform, which includes around 110 investment professionals across 12 cities.
Speaker: um Martin and Samantha draw on Aberdeen's global coverage list, built by specialist regional teams across developed markets, Asia-Pacific is Japan, Japan, and emerging markets.
Speaker: um When assessing a company, the managers focus on five areas. um The durability of the business model and its economic mode, the attractiveness of the industry, ah financial strength, management quality, and ESG credentials.
Speaker: Evaluation is assessed using measures such as earnings yield, ah free cash flow yield and dividend yield. Because the trust is income focused, um dividend capacity is obviously key. um So the managers look not only at today's yield, but also at whether that dividend is sustainable and and can grow. um Position sizes are typically between about 1% and 5%, so I would say that this is a high conviction, but still well-diversified global fund.
Speaker: Great. And what does the portfolio look like in practice? Well, the latest published fact sheet showed 55 investments made up of 51 equities and four fixed income holdings.
Speaker: Equities dominated the portfolio. um North America was around 34%, Europe x UK around Pacific Japan around the uk a little over and Latin America close to ah The largest holdings are exposed to well a wide range of businesses such as Philip Morris, so tobacco, ah Cisco Systems in technology, Johnson & Johnson healthcare, and DBS Group in financials.
Speaker: While the majority of the trust's top positions offer an above market yield and good dividend growth, some companies currently have a more modest yield but significant dividend growth potential, including, for instance, TSMC.
Speaker: Fixed income has become a very small part of the story. It now accounts for less than 2% of assets, so the trust is increasingly a pure global equity income vehicle, albeit with an unconstrained geographic footprint and unhatched currency exposure.
Speaker: I understand that the portfolio has been quite active recently. Could you maybe discuss some of the key changes? Yes, the turnover in 2025 was 19% of gross assets, ah up from 13% in 2024.
Speaker: ah That is still not high in absolute terms, but it is well higher than usual rule for the trust and I think um reflects the opportunities created by market volatility. So the managers trimmed several strong performers, including TSMC, Broadcom, Philip Morris, Enbridge, Siemens and Zurich Insurance.
Speaker: They added to companies where share price weakness created more attractive prospective returns, including Medtronic, Merck, Bristol-Myers Squibb, Pernod Ricard, and Deasio. There were also several disposals, including Atlas Copco on valuation concerns and SQM and global waivers because of weaker dividend outlooks.
Speaker: Now, new holdings included real Tinto for its diversified commodity exposure and more stable dividend, Intesa Sao Paulo for its attractive valuation and yield, and Infosys for its dividend growth credentials within the traditionally low-yielding technology sector.
Speaker: In um the second half, um the managers switched within Singaporean financials, selling overseas Chinese banking corporation and the buying DBS Group, which I've just mentioned.
Speaker: But they viewed DBS as less sensitive to falling short-term rates and some better diversified through areas such as wealth management. They also sold Telus, the Canadian telecoms company, as confidence in the sustainability of its dividend growth declined.
Speaker: The other new equity holdings started later in 2025 were Inditex, so the owner of Zara, Kone, the Finnish lift and escalator company, Loves, the US home improvement retailer, Veolia Environment, the French Water, Waste and Energy Management Group, and Grupo Financiero Ban Europa in Mexico.
Speaker: Since URM, the managers have also continued to adjust the portfolio, including exiting Mercedes-Benz and adding selectively to names that had lacked.
Speaker: Wow, so there there's certainly been a lot of activity. Turning to performance then, could you walk us through some of the numbers? Yeah, I must say that 2025 was a standout year. The Trust's NAV total return was 21.9% and the share price total return was 36%, compared with 12.6% from the benchmark and a 4.2% increase in UK RPI. So the Trust delivered both strong absolute returns and real growth ahead of inflation.
Speaker: The returns were broad-based, driven by a combination of um strong asset allocation and stock selection, with um fixed income, currency, and gearing also contributing positively before costs.
Speaker: ah The strongest stock contributors included some TSMC, Singapore Telecommunications, Philip Morris, Broadcom, and British American Tobacco. And the main detractors included Diageo, Peron of Ricard, Briston-Meyer's Grip, Ternus and Lark.
Speaker: You've touched on the benchmark change. Can you say more about what that means for how we should assess ah and MRI? Yeah, it is quite significant. The previous comparator was a broad global equity index with a very large US weighting and a heavy exposure to low-yielding technology names.
Speaker: That created a well structural mismatch with the trust because ah the trust is explicitly looking for income and dividend growth and has always had a broader geographic spread. ah The MSCI ACWI high dividend yield index is a better fit, I believe. it It still gives a global equity comparator, but it has a higher dividend yield, a lower US weighting, and a lower technology weighting than the broad MSCI ACWI.
Speaker: The portfolio has not managed to hack the benchmark, so to speak, but the new yardstick gives investors of care a fair way to judge whether the managers are delivering what the mandate offers. For longer periods, the company uses a blended benchmark history to reflect changes in a comparator over time. The key message is that the benchmark change does not alter the strategy, it simply makes the performance yardstick better aligned with the strategy.
Speaker: Could you also discuss the trust record on downside protection? Absolutely. um The trust is designed to participate in global equity growth, but with a degree of capital preservation in wicom ah weaker markets, I would say.
Speaker: ah We have previously highlighted company data showing that over the 20 years to the 30th June 2025, in months when global equities rose, the trust underperformed by an average of 0.4 percentage points per month, But in months when global equities fell, it outperformed by an average of 0.84 percentage points per month.
Speaker: That asymmetry is important. um Investors may give up some upside in very strong momentum led markets, particularly when US mega cap technology is leading, but they have historically received better relative protection when markets fell.
Speaker: I believe that for an income investor who also wants capital preservation, that is central to the proposition. Moving on to the dividend, which I understand is central to the trust, could you just walk us through the policy there at MYI?
Speaker: Yeah, sure. um The dividend story is one of the most compelling parts of the investment case. um The FY25 annual dividend was 12.4 pence per share, up 5.1% on the previous year.
Speaker: That maintained the trust's status as an AIC dividend hero with 21 consecutive years of annual dividend increases. ah Revenue return per share was 13.9 pence, up from 11.6 pence in FY24, and the FY25 dividend was 1.12 times covered by revenue.
Speaker: ah The Trust also had distributable revenue reserves of 85.4 million pounds at the end of 2025 before deducting their third interim and final dividends, at giving the board a well useful buffer in more difficult income years.
Speaker: um As I said earlier, the trust pays dividends from income and revenue reserves, not from capital. That means the dividend is based on what the portfolio actually earns all the time rather than drawing on the capital account.
Speaker: The current yield is around 3.5%.
Speaker: And on valuation, would i but would I be right in thinking that there's been quite a re-rating here since we last discussed the trust at the end of November? yeah Yes, there has. When we last featured the trust in our November 2025 episode, the trust was trading at a discount of around 4%. It now sits at an almost 2% premium to NAV, so the re-rating since then has been quite meaningful.
Speaker: i think that the shift likely reflects the recent strong performance and the greater appreciation of the trust's income and diversification credentials among investors. ah The trust buys back shares when it trades at a persistent discount to ex-income NAV and issues shares from trader when trades at a persistent premium to ex-income NAV.
Speaker: ah In 2025, the company bought back 12.9 million shares at a weighted average discount of 7.9%, adding 0.16% to MAV. But in 2026, it resumed selling shares from Treasury at a premium for the first time in three years.
Speaker: Great. Before we wrap up for today, could you also cover Murray International's fees and gearing? Yes, of course. The trust can gear up to 30% of NIV, although current gearing is modest.
Speaker: Total borrowings at the end of 2025 were unchanged at £110 million, pounds made up of unsecured fixed-rate sterling loan notes that are not repayable until 2031 the earliest.
Speaker: um The weighted cost of borrowing is 2.56% and net gearing was 4.4% at and had fallen to around 2.7% at the end of April 2026.
Speaker: On costs, the trust remains very competitive. The ongoing charges ratio for 2025 was 0.5%, down from in and is one of the lowest in the AAC global equity income sector. um ah I would note that the management fees tiered, so 0.5% of NAV up to £500 million pounds of net assets and 0.4% above that, and there is no performance fee.
Speaker: Fantastic. Thank you, Milos. So to close then today, could you summarize the investment case for Murray International? I would summarize it in four points.
Speaker: First, the trust office had genuinely differentiated global equity income portfolio. It is meaningfully underweight the US compared to global indices with a zero weight in max seven stocks as they do not pay sufficient income, um has a significant emerging markets exposure, and is driven by bottom-up stock selection rather than benchmark positioning.
Speaker: Second, the dividend record is strong, 21 consecutive years of dividend growth, dividend cover in FY25, and a policy of paying from income and revenue reserves rather than capital.
Speaker: Third, the trust has historically provided a useful degree of downside protection. It will not always keep pace with narrow momentum led markets, but its the diversified income approach has tended to help when markets are under pressure.
Speaker: And fourth, the trust um combines a differentiated portfolio with competitive costs, modus gearing, and a board that actively manages the discounted premium. After the re-rating, investors need to be mindful of valuation, but I believe that the stronger rating also reflects a better appreciation of what the trust is designed to deliver. ah The managers remain cautious on the macro backdrop.
Speaker: Geopolitical risks are elevated, interest rate expectations remain and uncertain, and currency movements can affect the global income portfolio. But Martin and Samantha's focus is deliberately on company fundamentals, um resilient income streams, and long-term dividend growth.
Speaker: That disciplining approach is at the heart of the trust's appeal. Brilliant. Thank you, Milos. A comprehensive update on Murray International Trust. You've been listening to Uncovering Trusts, a podcast by Edison Group.
Speaker: To learn more about Murray International and other investment companies we cover, please visit www.edisongroup.com. See you.
