Murray International fee cut after disappointing year – Murray International has reported a total return (ie with net income reinvested) of -7.5% for 2018, which it describes as a disappointing performance in absolute terms. This was somewhat below the total return of -5.2% from the benchmark (40% World UK Index and 60% World ex UK Index). The share price posted a total return of -6.8% reflecting a slight increase in the level of premium to NAV. Ordinary dividends for the year will amount to 51.5p, an increase of 3.0% from last year (2017: 50.0p). After accounting for the payment of the final dividend, there will be a small transfer of approximately GBP2.5 million from the company’s revenue reserves.
Fee cut
The board reports that it has negotiated a reduction in the level of the investment management fee payable to the manager. The annual management fee will continue to be charged on net assets (ie excluding borrowings for investment purposes), averaged over the six previous quarters (“Net Assets”), but it will now be based upon an amended tiering structure. The annual management fee from 1 January 2019 is now charged at 0.5% of Net Assets up to GBP1,200m and 0.425% of Net Assets above GBP1,200m. For the year ended 31 December 2018, the annual management fee was charged at 0.575% of Net Assets up to GBP1,200 million, 0.5% of Net Assets between GBP1,200 million and GBP1,400 million, and 0.425% of Net Assets above GBP1,400 million. This reduction in the level of management fee will, all other things being equal, flow through to a reduction in the OCR in future years.
The manager’s report notes that investments in tobacco stocks, BAT and Philip Morris were detractors from returns. Other significant detractors were Quimica y Minera, Daito Trust and Unilever Indonesia.
The strongest performance came from CME Group, one of the world’s most profitable operators of stock, derivatives and commodity exchanges, but communication giants Verizon and Telus plus technology innovator Intel also added significant contributions to absolute and relative performance.