By Scott Wright
THE Murray Income Trust has warned of “further obstacles” for the UK and world economy while reporting that it had outperformed its benchmark index in the six months to December 31.
The £670 million trust, which is focused heavily on UK equities, reported a nine per cent rise in net asset value total return per share in the six months ended December 31.
That outstripped the trust’s FTSE All-Share Index, which a saw 5.5% increase in net asset value total return per share for the period.
Manager Charles Luke said the “robust level of out-performance” reflected the returns from “domestically-oriented mid cap companies” such as Countrywide and Howden, which performed strongly after Prime Minister Boris Johnson secured a revised withdrawal agreement with the European Union in October, and after the election win for the Conservatives in December.
Mr Luke added: “Secondly, the corollary of this was the underperformance of some of the largest companies in the market (Shell, BP, and HSBC) in which the portfolio is underweight.”
The trust, which it part of Standard Life Aberdeen, writes in its report that UK stock selection was the “main contributor to performance” over the period. Its most valuable holding is in pharmaceuticals giant AstraZeneca, valued at £22.4m at December 31, which accounts for 3.5% of its
total investments.
It also has a 3.5% stake in GlaxSmithKline, worth £22.38bn, and Diageo, worth £22.5m.
Chairman Neil Rogan warned there is “still plenty to worry about” as he mulled the outlook, noting: “There are further obstacles to overcome this year: Trade deals with the EU, US, and beyond will be difficult to negotiate in a tight timetable. The US Presidential election in November will
dominate headlines.”
Mr Rogan said governments and companies that do not do enough on climate change will “come under ever-increasing pressure.”
But he added: “Irrespective of which way you leaned on Brexit or the UK General Election, the removal of political uncertainty is usually positive for stock markets. It is uncertainty that stops companies from committing to new capital expenditure plans, and uncertainty that makes consumers wait before spending. Now the UK has left the European Union and now the new UK Government has a very strong majority to take it through the next five years, it is likely that many of those spending decisions will be made sooner rather than later. Add to this the Government’s announced commitment to infrastructure and regional spending plus the Bank of England’s loose monetary conditions and it is not impossible that we will start to worry about the UK economy overheating before too long.”
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