Investment trust insider on Murray Income – James Carthew: Murray Income risks making switch at the wrong time
It is understandable why the board wants to review the future of Murray Income, which has been held back by its ‘quality’ style since a blockbuster merger five years ago.
There is a great deal of corporate activity going on at the moment as boards step up and look to tackle discounts. There is some evidence that this is having an effect.
The median discount across the whole sector has narrowed from 12.9% a year ago to 10.5% today. For trusts investing in listed equities, the median discount has narrowed from 10.7% to 8.3%. That is good news as it means that fewer of these trusts will be in the sights of the activists, but there is still more to do.
One of the latest to decide to take action was Murray Income (MUT). The trust is a decent size with net assets of £930m despite having bought back 18.8m (about £160m worth) of shares over the last three years. However, its performance is towards the bottom of the peer group table. A net asset value (NAV) total return of 2.2% from the underlying portfolio over the past 12 months compares to 10.6% for both the medium UK equity income trust and the FTSE All-Share, and 20.6% for the sector leader Temple Bar (TMPL).
That track record has weighed heavily on demand for MUT’s shares and is the main reason why it was trading on a 10% plus discount ahead of the announcement.
The board has been conscious of the poor relative performance of the trust for some time. At the… read more here