Murray Income Trust says that, over the six months ended 31 December 2016,its NAV per share rose 8.7% on a total return basis; the wider UK market returned 12.0%. The share price ended the period at a discount to NAV of 11.1%, compared to 12.3% at 30 June 2016, resulting in a total return to shareholders over the period of 10.5%. In relation to the year ending 30 June 2017, a first interim dividend of 7.0p per share was paid on 13 January 2017 to shareholders on the register at the close of business on 16 December 2016. A second interim dividend of 7.0p per share will be paid on 31 March 2017 to shareholders on the register at the close of business on 3 March 2017. A third interim dividend of 7.0p per share will be paid on 30 June 2017 to shareholders on the register at the close of business on 2 June 2017.
The manager says that, despite a healthy absolute return, the portfolio underperformed the benchmark during the period. Indeed, they point out that calendar 2016 as a whole has been a difficult period for the relative performance of many companies within the UK Equity Income sector. The portfolio is mostly populated by holdings that combine attractive dividend yields and a relatively high degree of income security through diversified geographical earnings streams. Unfortunately, these characteristics did not position the portfolio well in relative terms for the trends that influenced performance during the period. Firstly, oil and mining companies performed strongly as commodity prices recovered. Secondly, the domestic economy failed to suffer the collapse that some had predicted and as a result the share prices of those companies reliant on the strength of the UK economy rebounded from an oversold position in the immediate aftermath of the European Union referendum result. Thirdly, companies with defensive growth characteristics, which some people describe as ‘bond proxies’, underperformed and more cyclically exposed companies outperformed as interest rate and inflation expectations rose over the period. In addition, Capita issued a disappointing trading update in September citing delays in client decision-making, one-off costs on a contract and a weaker performance in a couple of the company’s trading businesses. The company later announced changes to its management and business structure coupled with a small disposal programme to provide greater focus.
MUT : Murray Income held back by lack of commodities exposure