Steady as She Goes: Murray International Trust Delivers Strong H1
Let’s cut straight to the chase: in a half-year marked by geopolitical tremors and market mood swings, Murray International Trust (MYI) didn’t just weather the storm – it sailed ahead with conviction. The numbers tell a compelling story of resilience and strategic nous.
The headline figures? A 6.0% NAV total return and a chunky 11.6% share price total return for the six months to 30 June 2025. This comfortably outstripped their reference index (FTSE All World), which managed a modest 1.0%. Even more eye-catching? The discount narrowed sharply from -7.5% at end-2024 to -2.7% by mid-2025. That narrowing gap between price and intrinsic value is a clear nod from the market: confidence is building.
What Powered the Engine?
The portfolio’s global diversification proved its worth, with five standout performers driving returns:
- Philip Morris International (USA): The trust’s largest holding, leveraging its tobacco base to fuel growth in smoke-free products (now 40% of revenue). Defensive earnings and cash flow shone.
- Grupo ASUR (Mexico): Airport operator rewarded shareholders with a whopping 14% yield via bumper dividends. Commercial revenue growth remains a cash cow.
- Hong Kong Exchanges (HK): Surged on record IPO activity and booming Stock Connect flows between China and HK.
- Singapore Telecommunications (Singtel): Lifted its dividend 26% after robust earnings, now yielding ~4.5%.
- Enel (Italy): This European utility impressed with operational strength, debt reduction, and dividend growth.
Not every holding joined the party. Healthcare giants Merck & Co. and Bristol Myers Squibb faced patent expiry fears and US pricing pressures, while spirits giants Diageo and Pernod Ricard grappled with tariffs (notably on cognac in China) and consumer downtrading. Taiwanese chipmaker GlobalWafers was sold entirely due to weak non-AI demand and margin pressure.
Strategic Chess Moves: Portfolio Reshuffle
The managers weren’t passive observers. They trimmed winners (like Philip Morris) and doubled down on laggards with conviction (Merck, Bristol Myers, Diageo, Pernod). New positions signal a clear directional shift:
- Rio Tinto (Mining): Swapped out volatile Chilean lithium miner SQM for this Anglo-Australian giant, seeking stable dividends and diversified commodity exposure (including lithium via its Arcadium acquisition).
- Infosys (India IT): Added tech diversification beyond semiconductors, attracted by its 7% yield, net cash balance sheet, and exposure to AI/cloud growth.
- Intesa Sanpaolo (Italian Bank): A bold bet on Europe. Italy’s top bank offers a juicy 7% yield, strong capitalisation (14% CET1), and growth potential in underpenetrated markets like wealth management.
The Income Machine: Still Purring
Amidst the capital gains noise, MYI’s income credentials held firm. Portfolio income jumped 13% year-on-year to £52 million. Crucially, 22 of 25 companies declaring full-year dividends increased payouts – Grupo ASUR led the charge with a staggering (though likely non-recurring) 281% hike. Only three cuts occurred, notably Mercedes-Benz (-19%) due to tariff uncertainty. Currency headwinds (a bugbear in 2024) were less severe this time, with Sterling weakening helpfully against the Euro and Latin American currencies.
Let’s not forget: Murray International cemented its AIC ‘Dividend Hero’ status in 2024 – 20 consecutive years of dividend growth. With £78.5m in revenue reserves (1.12x 2024’s dividend), that progressive policy looks secure.
Gearing, Costs & Governance: Prudent as Ever
The trust maintains sensible leverage: net gearing edged down to 5.8% (Dec 2024: 6.1%), funded by cheap, long-dated fixed-rate debt (2.56% avg cost). The Board’s stance? “Interest rates remain too high for further gearing… for now.” Ongoing charges? A razor-thin 0.51% – testament to tight cost control.
Board refresh continued: Alexandra Mackesy retired, replaced by seasoned investment pro Jeroen Huysinga (ex-J.P. Morgan AM).
Looking Ahead: Eyes Wide Open
Chair Virginia Holmes and managers Connaghan & Fitzpatrick strike a balanced tone. While acknowledging resilience – markets hit “new all-time highs” by mid-year – they flag persistent challenges:
- Geopolitical flashpoints (Israel-Iran, Russia-Ukraine, US-China trade).
- US fiscal sustainability concerns.
- Inflation risks potentially limiting central bank rate cuts.
Their mantra remains unchanged: patience, global diversification, and risk-awareness. The recent benchmark switch to the MSCI ACWI High Dividend Yield Index (from 1 July 2025) better aligns the reference point with MYI’s income-driven style.
The Takeaway
This was a textbook Murray International half-year. It leveraged global diversification to capture gains where they emerged (airports, utilities, Asian tech), managed setbacks pragmatically (healthcare, spirits), and kept its income engine humming. The narrowing discount suggests the market is warming to its consistent, yield-focused approach in uncertain times. While the road ahead looks “uneven and challenging,” MYI’s blend of income resilience, strategic agility, and modest costs offers a compelling proposition for investors seeking shelter – and growth – in the storm.
