Murray Income Trust Publishes Half-Yearly Report

An investment trust founded in 1923 aiming for high and growing income with capital growth

Financial Calendar, Dividends and Highlights

Chair’s Statement

Highlights

• The Board has declared that the first three interim dividends for the year to 30 June 2025 are 9.5p per share, with a fourth dividend to be announced after the Company’s year end. The total dividend for the year to 30 June 2025 is expected to be at least 39.0p per share
• NAV total return of -2.1%, underperforming the benchmark return of +1.9%.
• Continuation of share buybacks, with 2.8% of shares bought back in the six month period.
• Reduction and simplification of the investment management fee from 1 July 2024
• Awarded ‘Best Equity Income Trust’ at the UK Investor Magazine Awards 2024.

The Company has been awarded the ‘Best Equity Income Trust’ award by UK Investor Magazine. The judging criteria included: the long term consistency of dividend growth; the current yield; the attractive cost basis relative to peers; and the current opportunity to buy shares at an attractive discount to NAV.

Investment Performance

For the six months ended 31 December 2024 (the “Period”), the Company’s NAV (with debt at fair value) fell by 2.1% to 918.7p while the share price fell by 2.4% to 817.0p, both measured on a total return basis, whilst the FTSE All-Share Index (the “Benchmark”) rose by 1.9% on a total return basis.

In the context of the wider stockmarket it should be noted that the Company portfolio is a ‘Quality’ dividend growth trust and that ‘Quality’ has significantly underperformed ‘Value’ based indices over the past four years, after a previous four-year period of strong performance from ‘Quality’ stocks. There have also been some stock specific issues which have detracted from performance in the Period. We continue to believe, however, that a portfolio of quality income stocks will outperform over the long term. Further detail may be found in the Investment Manager’s Report.

Overview

The Period under review witnessed significant geopolitical events including the re-election of President Trump in the USA and, in the UK in July 2024, the election of a new Labour Government, as well as the continuation of the war in Ukraine. Specifically, the re-election of President Trump, with his predilection for tariffs, could favour UK domestically oriented stocks relative to international ones, and the Ukraine war will continue to impact on UK energy supply issues and UK defence expenditure. Indeed, as we go to press, the Government has just announced an increase in overall defence expenditure from 2.3% to 2.5% of GDP by 2027.

Before the election, the Labour Party had been at pains to demonstrate that it would pursue a business-friendly and economic growth agenda, an intention which was not fully apparent in its October Budget. More recently there have been announcements about re-focusing on a number of infrastructure projects, including the Oxford-Cambridge rail link, new reservoirs, the development of small nuclear reactors, and even the re-emergence of the Heathrow expansion plan. Whilst these projects will take years to come to fruition, there is a potential benefit, in the intervening years, for increased demand for construction and skilled engineering and design services in the UK.

In the meantime, we continue to advocate for fair cost disclosure for investment trusts such that they are not disadvantaged relative to other investment products. The UK Government appears to have accepted this case in principle, although the Financial Conduct Authority seems less convinced. I would also like to repeat my support for an end to the Stamp Duty tax on the purchase of UK equity shares. Such an abolition would bring the UK in line with other major equity markets such as the USA and Germany. I realise that the UK Government is strapped for cash at present but even a move to exempt smaller companies from this tax, or to reduce the percentage level at which it is charged, would represent an initial step in the right direction.

Finally, I would just wish to highlight that, as mentioned in the Investment Manager’s report, the current investment portfolio boasts a significantly higher return on equity than the market, meaningfully stronger earnings growth stability than the market and lower gearing than the market – all in all a good quality portfolio currently standing at an attractive discount to NAV.