Murray International Trust PLC on Friday reported an underperformance against its reference index for 2021, due to adverse stock selection, despite a rise in net asset value.

For the year, the trust’s NAV total return was 14% with net dividends reinvested, falling short of its reference index, which returned 20%.

The reference index is made up of 60% FTSE World excluding UK Index/40% FTSE World UK Index until April 2020 and then 100% FTSE All World TR Index from May 2020.

‘In capital terms, for the third consecutive year, North America delivered the strongest index returns, yet again led by the Technology sector. For the third consecutive year, this disproportionally inflated returns from the Reference Index, which remains increasingly detached from the total return investment objective of any income focused portfolio,’ said Murray’s investment manager.

As at December 31, Murray International’s net asset value per share stood at 1,240.3 pence, up 8.9% from 1,138.2p on the same date a year prior.

The company’s share price at the end of December was 1,156.00p, reflecting a 6.8% discount to NAV.

Shares in Murray International were down 1.2% on the day Friday in London at 1,154.08 pence.

Murray International declared a dividend of 55.0 pence per share, up 0.9% from 54.5p the prior year.

The trust said it has been in discussions with its investment manager over its investment style and the continued underperformance against its reference index. Topics discussed include the manager’s focus on more high-quality companies with strong balance sheets that have more long-term value, and the company’s preference for paying its dividend from revenue instead of capital.

Concerning the Ukraine invasion, Murray International said it has no direct investments in Russia or Ukraine; however its portfolio does have exposure through multinational firms with operations there.

‘From a portfolio perspective, the evolving business backdrop presents numerous attractive investment opportunities for the company’s unconstrained global mandate. In these uncertain times, the company’s inherent investment flexibility permits broad country, sector and stock diversification at a time when most global equity markets seem never to have been so narrow, concentrated and expensive. Exposure to growth businesses in Asia and the developing world offer, currently often ignored, potential for superior long-term total returns, whilst an overall focus of the portfolio on ’real’ assets seeks to mitigate rising inflationary threats,’ Chair David Hardie commented.

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