Murray Income Trust

The Murray Income Trust mirrors the open-ended strategy ran by the firm since 2000. However, the managers will deploy gearing of 8-10% allowing them to take advantage of the closed-ended structure to boost both income and total returns.

The underlying investment philosophy of the trust embraces the belief that shareholders are rewarded by investing in companies with a sustainable business franchise at an attractive valuation point in their business cycle.

Stocks deemed to be 'special situations' tend to appear in many different sectors, but are driven by similar catalysts: management change, recovery and industry restructuring. However, all the investments in this trust have further similarities: they all have a strong franchise and often a unique product; they all have a quality management team whom the managers have met on several occasions, and most of them have been market darlings in the past, but have since fallen by the wayside.

The managers seek undervalued companies that are able to generate a high degree of surplus cash. This cash can be returned to shareholders, providing an income, or re-invested back into the business. The team therefore focus their analysis on whether companies use their cash wisely. 

At the point of purchase a price target is established for a stock. This target is based on a variety of factors, which will vary depending on the company in question, but may include underlying asset value, price to earnings ratio, dividend yield, free cash flow yield and the strength of the company's intellectual property rights. Share prices are constantly monitored and targets revised according to news flow. The sell discipline is driven by the performance potential of new investments compared with existing holdings. Typically, a stock will be sold if it reaches the price target; if from a risk/reward perspective there are better ideas elsewhere; if the company’s fundamentals deteriorate, e.g. because of regulatory or market change; or if the thesis does not evolve as the managers anticipate.

All managers and portfolios are reviewed formally each quarter by the investment committee, chaired by the chief investment officer. The data reviewed by the committee is collated from a variety of sources, most significantly from Style Research and StatPro Risk Management analysis tools. The review concentrates on the portfolios’ relative exposures to key fundamental factors, ex-post and ex-ante risk statistics, plus stress test results and value at risk (VaR) as viewed over time. For each strategy, the portfolio is analysed in numerous ways to ensure that no unintended risks have built up.

The trust is built company by company from the bottom up without reference to the index. They have no restrictions on sector weightings and this has been an important driver of outperformance in the past. The managers’ focus on absolute risk ensures their portfolios are properly diversified. To this end, they have a maximum limit of 5% on individual stock holdings. Position size is a function of assumed upside, conviction and liquidity. The trust will typically hold between 50 and 70 holdings with a bias towards large-cap stocks. Style analysis is used to measure the portfolio’s style tilt, enabling them to monitor the portfolio’s beta or its tilt towards any particular investment style.

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.

ESG - Integrated
The team integrate ESG analysis into the process based on the belief that good or improving ethical and social practices can be beneficial to a business. This could be through an improvement in the sustainability of operations and cash flow, a lower cost of capital (as the company stays investable to a wider pool of investors), and therefore better financial outcomes. This in turn will lead to better long-term share price performance. There are also the wider social benefits too. 

The team are active managers, meaning they will discuss their thoughts and analysis with their companies, though this does not mean they will take an activist stance and force change. They are long-term investors and believe their above average holding periods enable them to constructively improve firms through management engagement.

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.

The Murray Income trust will be run with gearing of 8-10% with the aim of enhancing income and total returns, dividends will be paid quarterly.

Artemis became manager of this trust on 2 March 2026. In the previous five years at abrdn, the trust traded at an average discount of 6.1%. It should be noted that investment process was different at Murray when compared to the current management team.