8th Mar 2019 08:49
LONDON (Alliance News) - Murray International Trust PLC on Friday reported a drop in net assets in 2018, underperforming its benchmark, though it has upped its dividend.
At December 31, the investment trust's NAV per share stood at 1,107.8 pence compared to 1,251.4p at the end of 2017, an 11% fall.
Murray International's net assets also decreased 11% in the same period to GBP1.42 billion from GBP1.60 billion.
The investment trust's NAV total return in 2018 was negative 7.5% compared to its benchmark, which is a 40% FTSE World UK Index and 60% FTSE World excluding UK Index, losing 5.2%.
Murray International declared a final dividend of 17.0p, flat on the year before, and along with three 11.5p interim dividends gives a total dividend of 51.5p, 3.0% higher than the 50.0p distributed in 2017.
The trust's worst performers were British American Tobacco PLC, Chilean chemical company Quimica Y Minera, US tobacco firm Philip Morris International Inc and Japanese construction firm Daito Trust Construction Co Ltd, losing 1.4%, 1.2%, 0.9% and 0.9% over 2018, respectively.
Murray International's best performer was US financial market operator CME Group Inc, contributing 0.8% to NAV.
Chair Kevin Carter said: "Global equity markets experienced a difficult twelve months to December 2018. Despite a diversified defensive strategy, protecting capital proved unsuccessful in a period of widespread weakness. Solid stock selection in Asia, North America and Europe positively impacted relative performance as did portfolio exposure to emerging market bonds."
Investment manager Bruce Stout of Aberdeen Asset Managers said: "Calendar year 2018 witnessed the worst performance from global equities in a decade, providing a stern test of portfolio conviction and investment process. The term 'rollercoaster' barely does justice to the path of financial markets over the period."
Stout said global technology stocks endured a "torrid" twelve months with "significant capital made and lost" but only the impact to the trust's portfolio was "minimal" due to income restraints.
The trust suffered from its exposure to tobacco stocks, with Stout adding: "Out of favour despite supportive yields and cash flows, the sector failed to deliver defensive support. Patience will be required until sentiment improves."
Stout continued: "Larger absolute portfolio weightings in Asia, Latin America and North America generally preserved capital with the exception of Chile and Mexico where relative stock weakness following two years of exceptionally strong performance restrained returns. Positive gains from Asian equities in a region that witnessed an index decline of 6.8% were most welcome."
The trust's emerging market bond portfolio was "constantly buffeted" by currency concerns but Stout believed the performance was "respectable relative to global equity market performance".
Murray International's current fixed income exposure "continues to offer additional desired diversification" at "attractive valuations" with the investment manager likely to maintain the existing levels.
Looking ahead, Stout offered: "An unfamiliar economic landscape of chronic over-indebtedness, insolvent sovereign balance sheets, extinct policy options, structured income inequalities and unpredictable disruptive industries dominate the developed world outlook. Balance sheet strength and quality will be emphasised as will exposure to genuine growth opportunities."
Shares in Murray International Trust were down 1.2% Friday at 1,162.52 pence each.
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Murray International