Monthly Archives: March 2017

Stocks in Focus: Murray International

This week I am looking at Murray International, an investment trust that recently released its full year results for the year to 31 December 2016. The fund aims to achieve capital growth while also providing an above average dividend yield, predominantly through investment in worldwide equities.

Murray’s 2016 results were very positive and its total return performance was in the top 25% for Global Equity Income funds during the year. Sterling weakness was cited as being a key factor for the strong performance, as the fund has relatively low exposure to the UK economy while being significantly overweight in the Asia Pacific and Latin America regions. Successful stock selection and asset allocation was also a large contributor to the outperformance.

The manager, Bruce Stout, has focussed the fund towards emerging markets, as this is where he sees the most growth potential alongside attractive valuations. Mr Stout has also reduced the gearing in the fund by 30% by clearing a Yen denominated loan on the back of this strong performance, with all remaining debt now drawn in sterling.

After a couple of years of underperformance due to high weightings in Asia and Latin America/Emerging Markets, Mr Stout has this year been rewarded for sticking to his process. This fund offers investors a different approach to income investing and provides diversification against the traditional UK and Global income funds. Bruce Stout’s conviction in his methods has been beneficial to recent performance and highlights the need to take a long-term view when investing.  The investment trust historically has not traded at a wide discount to NAV and is currently at a 1% discount; in line with its 12 month average.  Despite its narrower discount it does offer a 4.1% yield, which is noticeably higher than most globally invested funds.

http://www.nwbrown.co.uk/library/

Stocks in Focus: Standard Life & Aberdeen Asset Management

Standard Life is to pay £3.8bn to acquire Aberdeen Asset Management in a deal which will see the combined company managing assets of approximately £660bn, making it the second largest Asset Manager in Europe. As investors, it is worth considering how this will affect both the shareholders in the companies themselves and those invested in their funds.

Standard Life and Aberdeen have both struggled in recent years with a rise in popularity of passive funds hurting the two, predominantly active, managers. Aberdeen has seen over £100bn of withdrawals from its funds since 2012 while Standard Life recently reported disappointing outflows from its flagship ‘Global Absolute Return Strategies’ range of funds. This deal is a defensive one with the combined company due to benefit from significant cost reductions. Management expect savings of £200m annually from the end of 2018 but that there will be £340m of restructuring costs – it will therefore be a couple of years before the full effect of the benefit will be felt.

Whilst Aberdeen is known for its Asian and Emerging Markets funds and Standard Life for its UK and European funds, there is a certain degree of overlap. Investors in some funds may, therefore, find that they are merged with others. This will likely lead to the best managers being retained and so should ultimately benefit investors.

Economies of scale will bring cost-savings, benefitting the combined company and, ultimately, the shareholders. Investors in their funds, while not likely to see any reduction in management charges, should benefit as the restructuring of the company results in an improved offering. However, bigger is not, necessarily, better and there are significant risks to be navigated by Martin Gilbert and Keith Skeoch, the ‘co-CEOs’ of the new combined entity.

http://www.nwbrown.co.uk/library/