Friday 12 April 2013

Making A Mint Out Of Murray (In Investment Trusts I Trust)

A couple of weeks ago I sold my second tranche of house builder's shares, which consisted of half my shareholdings in Barratt and Taylor Wimpey. Having notched up some impressive gains in this sector, I was keen to lock in some of the profit. Both shares were showing gains of around 150% since purchase.
House builders now have only a 5/6% weighting in my portfolio, down from about 20% before the recent bout of sales.
With the proceeds I topped up my holdings a little in AstraZeneca and GlaxoSmithKline, and made a new acquisition in the form of Murray International Investment Trust, which now accounts for 5% of my portfolio. I still hold about 5% in cash.

I like Murray International for several reasons.  Firstly the manager's name; Bruce Stout. That's a winners name if ever I heard one. He's also hails from Scotland, a nation renowned for its production of quality managers (Sir Alex Ferguson, David Moyes, Paul Lambert, Malky Mackay).

The fund is a global income fund with a decent yield of 3.4%, notably it also holds some fixed interest holdings, although these currently only account for a very small portion of the portfolio as Bruce shares my bearish views on global bond markets. The fund has performed admirably during his 9 year tenure, boasting impressive returns as shown from the graph below (NB graph is 5Yr). It also picked up a 'Best Global Income Award' from the Investors Chronicle recently.

performance chart

Unfortunately the fund's huge popularity with investors has resulted in it trading at a significant premium to NAV as shown by the difference between the yellow and blue lines on the graph.
I never like to overpay for anything, but I wanted this fund to be part of my portfolio and I don't see the premium gap narrowing any time soon. I intend to hold this fund long term, and hope in the greater scheme of things, overpaying a little for it will not matter.

For more info on investment trusts check out my old post here.

If you're interested check out this link to a video of Bruce Stout explaining his strategy.

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