Murray Income Trust Under New Management: Artemis Takes the Helm
The £1 billion Murray Income investment trust, a familiar name within the FTSE 250 Index and a stalwart for investors seeking income from UK equities, is undergoing a significant transformation. Following a comprehensive review by the trust’s board, the portfolio management reins have been passed from Abrdn to Artemis. This change heralds a new era for the trust, led by a seasoned team with a proven track record in navigating the intricacies of the UK stock market.
The Artemis team, spearheaded by experienced managers Andy Marsh, Nick Shenton, and Adrian Frost, brings a wealth of collective expertise. Notably, all three, with Frost being a particularly prominent figure, have played instrumental roles in the remarkable success of the £5 billion Artemis Income fund.
Outperforming the Peers: A Look at Artemis’s Track Record
The performance of Artemis Income over various timeframes speaks volumes. Over the past three, five, and ten years, the fund has consistently outperformed the average returns generated by its peers in the UK equity income sector. This outperformance extends to its comparison with Murray Income under its previous management.
To illustrate, in the five years leading up to early March – the period just before Artemis assumed control – Murray Income delivered a return of 45 per cent. In stark contrast, Artemis Income achieved a gain of 73 per cent during the same period. The broader average for UK equity income funds during this time was a respectable 67 per cent. This disparity clearly highlights the significant value Artemis has historically generated for its investors.
Portfolio Evolution: A Blend of Continuity and New Directions
As anticipated, the investment portfolio of Murray Income is expected to bear a strong resemblance to that of Artemis Income. However, the transition of the trust’s holdings is an ongoing process. Since taking over the management responsibilities, Artemis has strategically retained a quarter of the UK stocks previously held by Abrdn, amounting to 13 individual companies. The remaining holdings have been divested, and new positions have been established in 32 companies. Crucially, all these newly acquired stocks are already part of the existing Artemis Income portfolio, underscoring a consistent investment philosophy.
Andy Marsh, one of the lead managers, elaborated on their core strategy: “What we do as managers is pick good companies run by good management teams and own them for the long term. The key is that the businesses are generating sufficient cash – after paying down costs – to leave enough both to pay a dividend to shareholders and fund future investment in the business.” This focus on sustainable cash generation and long-term value creation is central to their approach.
One notable addition to the Murray Income portfolio under Artemis’s stewardship is Tesco. This prominent UK retailer was not among the holdings when Artemis took over but has since been incorporated. Marsh expressed his confidence in the company, stating, “Tesco is a stable service business which has great growth potential. It has invested in terms of prices and products – and understands what customers want. Unlike some rivals such as Asda and Morrisons, it is not owned by private equity managers and held back by debt.” This selection reflects Artemis’s preference for well-managed, fundamentally sound businesses with clear strategic advantages.
Navigating Market Volatility: A Long-Term Perspective
While recent market fluctuations, partly influenced by geopolitical events in the Middle East, have led to a dip in Murray Income’s share price, Marsh remains unperturbed. He reiterated the team’s disciplined investment approach, emphasizing, “We don’t invest in the macro economy, just cash-rich businesses that will be around for the long term.” This long-term, business-focused perspective is a hallmark of Artemis’s investment strategy, aiming to weather short-term market noise by concentrating on resilient companies.
Key Differentiators: What Sets Murray Income Apart
While sharing a similar investment DNA with Artemis Income, Murray Income will possess three distinct features:
- Dividend Frequency: Murray Income will distribute quarterly dividends to its shareholders. In contrast, Artemis Income operates on a bi-annual dividend payment schedule. This more frequent payout may appeal to income-focused investors seeking regular cash flow.
- Leverage for Enhanced Returns: As an investment trust, Murray Income has the inherent ability to utilise borrowing, or leverage, to increase its exposure to equities. This can, in turn, amplify the pool of dividend income available. Artemis has confirmed its intention to employ this facility to potentially boost overall returns for shareholders.
- Discount to Net Asset Value: A characteristic of investment trusts is the potential for their shares to trade at a discount to the underlying value of their assets. Currently, Murray Income’s shares are trading at an 8 per cent discount, offering investors an opportunity to acquire assets at a reduced price.
Fee Waivers and Dividend Continuity
In recognition of the significant efforts undertaken to reshape the portfolio and align it with their investment strategy, Artemis has generously waived its annual management fee for the remainder of the current year. This gesture underscores their commitment to the trust and its investors.
A particularly impressive record that Artemis is keen to uphold is Murray Income’s long-standing commitment to annual dividend growth. This impressive streak currently extends back an unbroken 52 years. The current annual dividend yield stands at an attractive 4.5 per cent, which appears even more appealing when compared to the FTSE All-Share Index yield of 2.9 per cent. This combination of a strong yield and a consistent growth history makes Murray Income a compelling proposition for income-seeking investors.
Murray Income’s stock market identification code is 0611112, and its market ticker is MUT.
