Murray Income board launches surprise strategic review

The board of Murray Income has decided to launch a strategic review of the company. It says that it is looking at the “options available to the company in the pursuit of delivering improved performance and returns for its shareholders, whilst continuing to provide an attractive yield from a portfolio predominantly focused on UK equities”.

The board says that the trust’s performance has been below expectations for some time. It feels that this is encouraging the trust to trade at a persistent discount. The board engaged with Aberdeen to better understand the factors behind the company’s underperformance. Following this, the board has concluded that it is now appropriate to undertake a wider strategic review.

The board welcomes proposals for the future of the company from its current investment manager, alongside proposals from third party investment managers and other investment companies.

[QD comment, James Carthew: Last night, the trust was trading on a discount of 10.3%, which is too wide for a UK equity trust with a predominantly large cap portfolio and the sort of level that is bound to attract attention from discount-driven investors. Murray Income has had a poor run of performance, ranking last in its 18-strong peer group over 12 months (over 20 percentage points behind the sector-leader, Temple Bar), and fourth quartile over three and five years.

In last year’s annual report, there was no criticism of the trust’s performance by the board. In the last interim report, there was an acknowledgement that the trust’s focus on quality was not in favour and that there had been some ‘mistakes’ in stock selection, but no indication of a sense of frustration with the manager – hence my surprise at the announcement of the review.

Six trusts are trading close to NAV or at a premium, including Temple Bar, Law Debenture, and City of London. Aberdeen Equity Income is also in this list and does have a much better track record than Murray Income, it could be a contender, but it is a lot smaller than the others.]

MUT : Murray Income board launches surprise strategic review

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