Trustnet Magazine Issue 21 September 2016 | Page 19

/ FUND, PENSION, TRUST /

Trust

MURRAY INTERNATIONAL

This is one of the few closed-ended funds that can give its open-ended rivals a run for
their money in terms of capital preservation
It was one of the best performers in
2011 when the European sovereign
debt crisis intensified and topped its
sector during the financial crisis in
2008 – its losses of 8 per cent that
year were less than one-quarter of
those experienced by its peer group
average.
As a result, Murray International
has been one of the best performing
IT Global Equity Income trusts in
terms of maximum drawdown,
risk-adjusted returns (as measured
by the Sharpe ratio) and downside
capture ratio over 10 years.
The trust has also been an
effective holding for income investors
as its board has a good track record
of increasing its dividend. The trust
currently yields 4.14 per cent, which
– along with Stout’s track record of
preserving capital – explains why it is
currently trading on a 3.37 per cent
premium to NAV.

PERFORMANCE OF TRUST VS SECTOR
AND BENCHMARK UNDER STOUT
400%

Murray International Trust (373.70%)

350%

IT Global Equity Income (213.20%)

300%

Murray International benchmark (193.33%)

250%
200%
150%
100%
50%
0%

Jul 16

Jul 15

Jul 14

Jul 13

Jul 12

Jul 11

Jul 10

Jul 09

Jul 08

Jul 07

Jul 06

-50%

Jul 05

FILE
MANAGER: Bruce Stout
DISCOUNT/PREMIUM: 3.37%
GEARING: 12%
OCF: 0.75%
FE CROWN RATING:

period of low returns appears to be
on the cards.
As such, he has a cautious
portfolio of high-quality defensive
equities with global earnings
streams as well as debt issued by
emerging market sovereigns and
corporates.
“Such stretched, distorted
practices keep us cautious and
focused on more attractive relative
value deemed to exist in emerging
market assets,” Stout said.
FE data shows the manager’s
focus on capital preservation has
worked well over the long term. The
trust has been the best performing
portfolio in the IT Global Equity
Income sector since he took charge
in June 2004, beating its benchmark
by more than 180 percentage points.
While the trust has struggled in
recent rallies – such as in 2013 – it
comes into its own in falling markets.

Jul 04

N

OW SEEMS LIKE AN
IDEAL TIME TO FOCUS ON
PORTFOLIOS that can offer
downside protection to investors.
While equities have rallied hard
since the EU referendum, meaning
valuations have risen, there is still
clear uncertainty surrounding the
economic and political impact of
Brexit, the upcoming US presidential
election and the future path of
interest rates in the world’s largest
economy.
The structure of open-ended funds
is regarded as better suited to this
objective than that of their closedended counterparts – the latter
tend to be more volatile thanks to
discount movements and gearing,
features not seen in the world of unit
trusts and OEICs.
Nevertheless, certain managers in
investment trust land have built up
strong and enviable track records by
avoiding the worst that the market
has to offer.
One of these is Bruce Stout,
manager of the popular Murray
International Trust.
Stout has long-held the view that
central bank policies such as ultralow interest rates and quantitative
easing have done nothing for the real
economy apart from distort financial
markets to the point that a prolonged

Source: FE Analytics

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