Six Elite Rated funds and how they do things differently
When you are thinking about investing in a fund, it’s always important to know exactly what it does...
Murray Income Trust
Investment trust
Murray Income Trust aims to provide a high and growing income combined with capital growth by investing in a portfolio of 30-70 UK companies. The trust is conservatively managed and targets resilient companies which can thrive in any economic scenario.
Our opinion
Backed by a strong UK equities team, Murray Income Trust is all about building a portfolio of high quality companies which deliver a resilient income, as well as offering strong capital growth prospects. The result is a dependable, diversified and differentiated trust, which has delivered consistently strong performance at a time when it has been challenging for UK equities. The trust has grown its dividend for investors for almost 50 years and recently completed a merger with the Perpetual Income & Growth Investment Trust (PLI), which has resulted in greater scale and lower costs for investors.
Trust manager
abrdn is the new brand of Aberdeen Standard Investments (ASI). It unifies the merger of Aberdeen Asset Management and Standard Life Investments, which took place in August 2017. With more than 30 locations worldwide, abrdn seeks to find the most sustainable investment opportunities globally.
Charles Luke is an investment director in the UK equities team and has more than 20 years’ experience managing UK equity income funds. He has been managing the Murray Income Trust since 2006. Charles originally joined Aberdeen in 2000 having started his career at Framlington Investment Management in 1998, covering UK equities.
Iain Pyle join Charles as deputy manager on the trust in 2018.
I’m not someone who likes surprises so investing in good quality reliable companies suits me down to the ground.
Charles Luke Trust manager
Investment board
The six-strong board is chaired by Neil Rogan. A veteran of the asset management industry, Neil is former head of the global equities team at both Gartmore and Henderson and former head of international equities, as well as a former member of the investment division executive committee, at Gartmore. He has previously managed Fleming Far Eastern Investment Trust and, while at Touche Remnant, he worked on TR Pacific Basin Investment Trust, TR Technology Trust and Bankers Investment Trust.
The remaining board members are Peter Tait, Stephanie Eastment, Alan Giles, Merryn Somerset Webb and Nandita Sahgal Tully.
Investment process
Charles adopts a strict investment process based on a disciplined evaluation of companies through meetings with management. Stock selection is the principal source of added value, with quality and price both assessed.
Charles is part of the 15-strong UK equities team at abrdn, which covers the 350 biggest companies listed in the UK. Investment ideas are considered against a variety of factors. These include: the attractiveness of the industry it operates in, the durability of the company’s business model, its financial strength, management capabilities, and environmental, social and governance (ESG). This is supported further by company meetings.
The focus is on high quality companies. The team sees these as firms which have fewer tail risks and a greater margin of safety; produce less volatile earnings streams (resilient and sustainable earnings); and can better navigate an uncertain future while capitalising on opportunities to create value. The trust also looks to maintain a healthy exposure to mid-caps, while overseas stocks may represent up to 20% of holdings, this gives further diversification in terms of market-cap and geography respectively.
The result is a portfolio of around 30-70 companies (although it is normally between 50-70). Turnover is typically low, with the average company held within the portfolio for five years, although the team can – and have – exited a business quickly should they spot any significant concerns.
Murray Income Trust pays Aberdeen Standard Fund Managers a tiered annual management fee based on net assets: 0.55% up to £350m, 0.45% from £350m to £450m and 0.25% above £450m.
ESG
ESG - Integrated
This trust has three core principles which underpin its ESG approach. The first is that ESG can materially impact returns and long-term success of a strategy. Secondly, the team believes that by integrating ESG factors into investment decisions the manager gets a better understanding of how well companies are mitigating risks and opportunities. The third pillar is based on the preference for active engagement, with management teams’ being central to enhancing value – for example, the manager is comfortable investing in sectors such as oil and gas, subject to the belief that the company is taking the necessary action to address the energy transition.
Abrdn has around 150 equity professionals globally, all of whom analyse ESG risks and opportunities for each company. It also has a 20 strong ESG investment team, providing consultancy and insight. These teams help to build the ESG profile for each potential investment. An ESG House Score and an Equity ESG Quality Score are produced by the ESG equity analysts and the investment manager equity sector analysts respectively. This is done to help build the profile of each potential investment, while the management continually engages with companies to maintain ESG standards.
Risk
As an income-based portfolio, risk tends to be lower than those vehicle’s targeting growth. The trust is well-diversified and has risk embedded throughout the process – including a 20% exposure to overseas companies, which allows it to benefit from currency gains during periods of sterling weakness.
Murray Income Trust is designed to be resilient in all market conditions. Investors can expect it to protect assets in downward markets although it may lag in periods of strong outperformance from equities.
Gearing
The Board continues to believe that the appropriate neutral gearing rate is 10 per cent.
Read more about this fund
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