- Defensive income trumps growth in 2022
- 5-for-1 share split proposed
- On course for 18th successive dividend increase
Despite choppy financial market conditions throughout 2022, global income star Murray International (MYI) delivered a net asset value (NAV) total return of 8.8% for the year to December.
This comfortably outperformed a 7.3% drop in the FTSE All World Total Return index as Murray International’s diversified portfolio and defensive income style came to the fore.
Steered by veteran fund manager Bruce Stout (pictured below), Murray said it plans to raise the total dividend for 2022 by 1.8% to 56p, marking an 18th year of payout increases from this Association of Investment Companies’ (AIC) ‘Next Generation Dividend Hero’.
Chairman David Hardie conceded the trust’s performance couldn’t keep pace with the abnormally high 13.4% rise in the UK Retail Price Index, a tough hurdle to match, but Murray’s share price posted a higher total return of 20.6% thanks to a marked narrowing of the discount over the period.
THE STIFEL VIEW
Stifel analyst Iain Scouller said Murray’s strong year came on the back of ‘a couple of tough years’ for the trust, ‘when performance was beaten by other portfolios focused on growth stocks such as Scottish Mortgage (SMT)’.
However, ‘the tide has certainly turned and Murray International’s defensive income style has delivered. The good relative performance was reflected in renewed demand for the shares, with the discount re-rating from 7% to a 3% premium over the year. We continue to like the differentiated investment strategy and maintain a positive rating.’
DOING THE SPLITS
Having seen its share price increased in recent years to the point where they regularly trade north of £13, Murray proposed a 5-for-1 share split in order to assist ‘monthly savers, those who reinvest their dividends and those who are looking to invest smaller amounts such as younger investors’.
The sub-division won’t affect the overall value of any shareholder’s holding in Murray International, but the board says it should improve the liquidity in and marketability of the shares.
STICKING WITH ‘BARBELL’ STRATEGY
An investor in everything from electronics giant Samsung (005930:KS) and pharma company Merck (MRK:NYSE) to Mexican airport operator Grupo Aeroportuario del Sureste (ASURB:BMV) and emerging market bonds, Stout is sticking to his ‘barbell’ strategy of owning both growth and cyclical stocks.
‘Structurally higher inflation is supportive of companies owning real assets and those possessing pricing power,’ he explained, whilst ‘selective growth companies should benefit from accelerating trends in industrial automation, semiconductor miniaturisation and digital communications. The greatest potential for positive cyclical momentum upside surprises can still be identified in Asia and other countries where substantial pent up demand from prolonged Covid effects still exists.’
Stout also warned that with global central banks ‘increasingly devoid of policy options and tarnished by diminishing credibility, the outlook has rarely been so opaque.’
Accordingly, Murray International’s ‘high conviction investment strategy will remain focused on avoiding the pitfalls of previous valuation excesses and emphasising unaffected opportunities where realistic growth and income prevails.’
