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Murray Income and Perpetual Income & Growth trust merger: One year on

This month marks the first anniversary since the merger between Murray Income Trust PLC (Murray Income) and Perpetual Income & Growth Investment Trust plc (PLI), when shareholders migrated over to Murray Income resulting in an investment trust with assets of over £1bn.

The performance of Murray Income over a 12-month time period has been consistent, with net asset value returns of 19.84%, comparing favourably to its benchmark, the FTSE All-Share which increased by 19.48% over the same time period. (source: Morningstar 22/11/2021.) Further information can be found at the Company’s website: www.murray-income.co.uk.

With clear advantages for both existing and PLI shareholders, the merger saw improved liquidity, trading volumes higher and the bid-offer spread being reduced. Most significantly, the benefit of economies of scale has resulted in the ongoing charges ratio falling from 0.64% to 0.46% (this includes the one off 6 month management fee holiday from the Manager). In addition, Murray Income, an AIC Dividend Hero, intends to retain this status, having grown its dividend for 48 consecutive years and currently has a yield of 3.8%.

Charles Luke, Senior Investment Director at Murray Income, reflected: 

“It has become commonplace to say that the post-pandemic environment will be fundamentally different. Certainly, there are structural changes that will emerge, but much will remain the same. We do not see a changed outlook over the next 5-10 years for the majority of the companies held by Murray Income and have resisted making significant changes to the portfolio in anticipation of an altered world. Where our portfolio has changed, it has tended to be because we have compelling new ideas, rather than because the prospects for our holdings are different.” 

Awards 

Murray Income was awarded Citywire’s Best UK Equity Income trust in this month’s Citywire’s Investment Trust of the Year awards: Citywire Investment Trust Awards 2021: The Winners! – Citywire. In addition, the Board of PLI was recognised for taking the steps to merge the trust, in light of ongoing performance concerns of its then manager, by being awarded the Citywire ‘Best Board’ at the same awards: Perpetual Income scoops ‘Best Board’ award for Murray move – Citywire 

Outlook  

On the Company and economic outlook, Charles Luke said: 

“We expect that the global economy will experience several years of above trend growth as it emerges from the pandemic, aided by the vaccine rollouts and accommodative fiscal and monetary policy settings. However, divergence and asynchronous recoveries are likely to characterise this future period with disparities reflecting early and late vaccinators, developed and emerging economies, and manufacturing and services industries. For the UK, in particular, the backdrop both economically and politically is supportive with significant pent-up demand, a stable government, a fast vaccine rollout and Brexit concerns now in the rear view mirror. 

“Given this generally supportive backdrop, we are increasingly sanguine about the potential for the holdings in the portfolio to perform well while continuing to deliver an appealing and sustainable income stream. Moreover, valuations of UK-listed companies remain attractive on a relative basis. As an example, the dividend yield of the UK market remains at an appealing premium to other regional equity markets let alone other asset classes. 

“Indeed, we believe that in many cases the attractiveness of our holdings is not reflected in their share prices, particularly given the underlying strengths of the businesses. We think a fair proportion of the portfolio may be vulnerable to corporate activity and it is noteworthy that private equity purchasers often look for attractive quality characteristics in potential acquisitions that dovetail with our investment criteria. Furthermore, international investors remain underweight the UK providing a further underpin. Therefore, we feel very comfortable maintaining our investments in high quality companies capable of growing their earnings and hence their dividends over the long term.” 

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