Murray International’s interims for the first half of 2015 show the fund underperforming its benchmark – the net asset value total return declined by 2.6% compared with a positive total return of 2.0% on the Company’s benchmark (40% the FTSE World UK and 60% FTSE World ex UK). Over the six month period the share price total return declined by 4.1% reflecting a small reduction in the premium to NAV on which the shares traded.
There is no separate manager’s report but the statement says Sterling strength had a negative impact overall. Looking at asset allocation, the manager says the significant underweight position in North America was positive but overweight exposures to Asia and Latin America proved negative as both regional indices declined. Although positive stock selection in Taiwan, Singapore, Indonesia and Mexico produced solid capital gains, these were more than offset by weakness in Malaysia, Thailand and most noticeably Brazil. With the Japanese index being the best performing market in Sterling terms, the minimal exposure to Japan in their portfolio accounted for almost a quarter of benchmark relative underperformance. They also say that defensive portfolio positioning in Europe did not protect capital given a weak economic backdrop and challenging corporate environment. Although the recently increased fixed income portfolio performed resolutely in local currency terms, further weakness in emerging market currencies against Sterling dampened returns, marginally adding further relative negative performance to overall gross assets.
In May 2015 the Company entered into a new £50m facility with The Royal Bank of Scotland. This was drawn in full on 13 May 2015 and fixed for five years at an all-in rate of 2.4975%. The new facility has been used to repay a maturing Yen8.4bn loan (also with RBS). At the period end the Company had net gearing of 16.0%.
MYI : Murray International struggles on stock selection and Japan underweight