THE managers of a prominent investment trust have noted the impact of Brexit on the economy has not been as severe as expected after they signalled faith in the prospects for sectors that will be hit by any slowdown.

The £514 million Murray Income Trust added holdings in areas such as house-building, construction products and car distribution in the first half, during which it out-performed its benchmark, after concluding fears about firms’ prospects were overblown.

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The trust saw its net asset value per ordinary share decline by 7.2%, on the total return measure, in the six months to December 31, amid the volatility affecting global markets. The benchmark FTSE All-Share fell by 11%.

The chairman of the trust, Neil Rogan, said the results represented a return to form following a period of under-performance.

The trust has thousands of shareholders, including many in Scotland. It is managed by the Aberdeen Standard Investments operation created following the £11 billion merger between Aberdeen Asset Management and Standard Life in 2017.

“As a Board we believe that the merger… has resulted in a strengthened investment team for the Company and an improved investment process,” said Mr Rogan.

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The managers of the trust, Charles Luke and Iain Pyle, noted the weakness of the pound and concerns about the outlook for the UK economy made firms with overseas earnings attractive in the first half.

However, they said as the period progressed, the valuations of firms focused on the UK became more appealing after share prices fell.

“Although the outcome of Brexit is unknown, the impact on the UK economy to date has not been as severe as many expected, cushioned to some extent by the weakness of Sterling and lower oil prices … over the period,” wrote the managers in their performance report.

Speaking after the results were published, Mr Luke said the company was not making a call on Brexit.

However, he added: “Over the last two years we have been very cautious about the UK but more recently some of the valuations look like they are factoring in bad news that might not come to fruition.”

The five holdings added to the trust’s portfolio in the half included three exposed to sectors of the UK economy that would be vulnerable to a downturn in consumer spending or infrastructure investment.

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These are Marshalls, which supplies products such as paving stones, the Countryside Properties housebuilding firm and Inchcape, which describes itself as one of the leading franchised car retail groups in the UK.

The trust also increased its exposure to some firms the managers described as high-quality with attractive growth prospects and which are UK-focused or have big operations in the country. These include Associated British Foods, which owns Primark; Rentokil; National Grid; Telecom Plus; and information and exhibitions specialist Relx.

Welcoming the results, Mr Rogan indicated that directors were fairly sanguine about the likely impact of Brexit on the trust, which aims to achieve high and growing income with capital growth.

He said investor sentiment has been dominated by warnings that factors such as Brexit, trade wars, and increased interest rate uncertainty "could" have a materially negative effect on the UK, which are hard to deny and therefore easy to publish.

However, the manager of the trust must address much more important questions.These include: How will factors such as Brexit impact Unilever's sales of Dove and Persil in the UK and Europe, Diageo's sales of whisky in America and Prudential's growing insurance business in Asia.

The trust reduced the discount between its share price and net asset value per share to 6.5 per cent at December 31 from 8.4% at June 30.

Mr Rogan noted the trust has increased its total dividend for 45 consecutive years.

It incurred £1.6m management and related fees in the first half, against £1.7m last time.

In the first half report issued in February last year Mr Rogan said the trust was monitoring the performance situation closely with its manager.

Mr Luke has been managing the trust since 2006.

Founded in 1923, the trust was previously run by Murray Johnstone, which was acquired by Aberdeen Asset Management in 2000.

The manager of the Scottish Investment Trust, Alasdair McKinnon, said last week that the prospect of Brexit had not made it less likely to invest in UK firms. He said the fact other investors have been selling shares in UK-focused firms could create opportunities to buy at attractive valuations.