Murray Income (MUT ) has joined the growing number of investment trusts launching strategic reviews since the start of the year, with analysts suggesting this is a necessary step in its crowded UK equity income sector. 

An update today specified the review was prompted by discussions with investment manager, Aberdeen, and aims to tackle poor returns and a persistently wide discount to net asset value (NAV).

MUT said it wishes to maintain its UK equity focus and ‘attractive yield’, which is currently 4.6%. 

The move comes almost five years since the trust merged with rival Perpetual Income & Growth. This combination saw MUT’s market capitalisation increase significantly, as it acquired nearly £430m of net assets from the Invesco trust that was once run by Mark Barnett. 

Winterflood chief sector analyst Emma Bird noted the pressures facing Murray Income today look quite different. 

‘Strategic reviews have been increasingly prevalent in the trust sector in recent years, against a backdrop of prolonged wide discounts and sustained periods of underperformance at certain funds,’ she said. 

‘As a result of demand for ever larger vehicles from wealth managers, much of this has been concentrated amongst smaller funds considered “sub scale”.’

With a market capitalisation of £834m, this is clearly not the case for MUT. Although, the just over 10% discount means that is some way below its £930m net asset value (NAV). 

Instead, with demand spread across 17 investments trusts in its sector and four of these being managed by Aberdeen – alongside MUT there is Aberdeen Equity Income (AEI ), Dunedin Income Growth (DIG ) and Shires Income (SHRS ) – Bird sees any potential merger between MUT and a peer as ‘a positive result for investors in the sector overall’.

According to Winterflood data, MUT has traded at an average discount of 9.3% since the beginning of 2023 and currently suffers the second widest discount among its 17-strong UK equity income peer group. Only BlackRock Income & Growth (BRIG ), which trades 12% below NAV and has a market cap below £40m, has a worse rating. 

With reference to AIC UK Equity Income sector, Murray Income has also underperformed against the peer group average over one, three and five years. That is particularly pronounced over five years, with a 35.7% total return for shareholders being half the 71.1% sector average. The FTSE All-Share has returned 65% over the same half-decade period.