Over the 12 months ended 30 June 2022, Murray Income Trust’s NAV total return was -4.0% and its share price return -0.7%, both lagging the 1.6% return generated by the All-Share Index. Earnings of 40.5p covered the full year dividend of 36p (up from 34.5p for the prior year).
The chairman ascribes the underperformance to the manager’s focus on quality stocks (leading to an underweight exposure to banks) and a low exposure to oil and gas stocks (on ESG grounds). Without these two large components of the value sector, Murray Income’s relative performance suffered over the period.
Extract from the manager’s report
Looking specifically at the company’s portfolio, asset allocation and stock selection both held back performance over the Year with asset allocation being a more significant contributor to underperformance than stock selection where the impact was more modest. Negative asset allocation in the Year primarily reflected the portfolio’s lower exposure to the energy sector and higher exposure to the industrials and financials sectors.
Turning to the individual holdings, there were numerous companies that demonstrated strong share price increases. The share prices of Novo Nordisk, Drax, and Total Energies all increased by over 40% during the Year. However, the two poorest share price performances were from Countryside Partnerships and Ashmore whose share prices both fell by 52%. Countryside Partnerships underperformed as the company announced the CEO would be stepping down following poor execution and a failure to meet build targets. In our view the issues the company faced are fixable and partnership housing remains an attractive segment of the market given structural demand growth and high returns. The shares of Ashmore have been weak as emerging market debt has been out of favour leading to fund outflows. The holdings in Coca Cola Hellenic, Inchcape and Mondi also contributed negatively to performance, with each of these companies having exposure to Russia and/or Ukraine.
MUT : Murray Income misses out on value rally