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Murray Income Trust: March 2021 update

Senior Investment Analyst Kate Marshall shares our analysis on the manager, process, culture, cost and performance of Murray Income Trust.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

  • Charles Luke is an experienced income investor having managed this investment trust since 2006
  • He is part of a well-resourced team at Aberdeen Standard Investments
  • Perpetual Income & Growth Investment Trust combined with Murray Income Trust in November 2020

How it fits into a portfolio

Murray Income Trust aims to provide a high and growing income combined with capital growth, by mainly investing in UK companies. This trust could form part of an income portfolio or add UK exposure to a broader portfolio.


Murray Income Trust has been managed by Charles Luke since October 2006, with Iain Pyle appointed in September 2018 as his deputy. Luke and Pyle have the support of the 15 strong UK equity and other regional teams at Aberdeen Standard Investments (ASI). Some fund managers at ASI have specific areas of focus. Luke is responsible for two sectors; gas & electricity and health equipment & services, whilst Pyle covers oil & gas and banks.

The managers both help manage other UK equity income funds at ASI. Luke began his investment career in 1998 at Framlington Investment Management before joining Aberdeen in 2000. Pyle was formally an oil & gas analyst at Sanford Bernstein from 2007 and prior to this a management consultant at PwC. He joined Standard Life Investments in 2015.

In 2020 the Board of Perpetual Income & Growth Investment Trust decided that a change in its management was needed. They recommended to shareholders that it join with Murray Income Trust and appoint ASI to replace Invesco as managers. This was agreed by shareholders and most of the assets were transferred to ASI in November. The two trusts shared similar investment objectives, which made combining assets a sensible choice. The combined trust is larger, which will reduce costs for investors.


The trust mainly invests in larger UK companies, with some medium-sized and overseas companies. The managers focus on capital preservation and look for good quality companies, which can be bought at a reasonable share price and pay a dividend.

Luke believes that well-managed companies with sustainable and rising dividends will see their share prices grow over time. This combination could deliver both income and capital growth, though neither are guaranteed. Luke aims to manage risk by keeping the trust diversified and investing across a range of sectors. This approach, and focus on quality companies and capital preservation has historically led to better performance in weaker markets, although nothing is guaranteed.

Up to 20% of the trust can invest in overseas companies when Luke finds good opportunities. As at January 2021 16% of the trust was invested overseas. This is mostly in Europe and the US in areas like consumer goods (Nestle), health care (Roche) and technology (Microsoft).

In the second half of 2020 Luke made new investments in a range of companies offering decent prospects for capital and income growth, such as Direct Line Insurance, ICG and Safestore. Luke sold part of his holdings in Roche and Aveva at good share prices as they had performed well. Sales were also made where the COVID pandemic had affected business prospects, for example National Express and AB Foods.

Investors should be aware the trust can borrow money to invest with the intention of increasing returns (known as gearing), but this could magnify losses in a falling market and increases risk. The manager can also use derivatives, which if used adds risk.


Aberdeen Asset Management and Standard Life Investments merged in 2017, creating Aberdeen Standard Investments (ASI). Since the merger there has been changes to both investment processes and senior management at the firm, with both former chief executives leaving. The UK equity investment team is well resourced, seems settled and well established.

Luke incorporates environmental, social and governance (ESG) factors into his company analysis, as do all the investors at ASI. As a long-term investor, he believes this helps to highlight businesses that use more sustainable practices and could thrive over the long term. This could drive long-term dividends and it could also uncover risks that are less obvious through more traditional company analysis. There is an ESG team at ASI to assist and there is also a dedicated ESG analyst on hand within the UK team.


The annual ongoing charge to December 2020 was 0.46%. Investors should refer to the latest annual reports and accounts, and Key Information Document for details of the risks and charging structure. If held in a SIPP or ISA the HL platform fee of 0.45% per annum (capped at £200 per annum for a SIPP and £45 for an ISA) also applies. Our platform fee doesn’t apply if held in a Fund & Share Account.

Part or all of the annual charge is taken from capital rather than income generated. This could result in a higher dividend yield but can limit capital growth.


The trust has performed well over the manager’s tenure and is ahead of the FTSE All Share index. It has also increased the annual dividend since 1973, which is one of the longest records of any UK equity income investment trust.

UK equity income funds had a tough first half to 2020 as the COVID pandemic severely impacted many companies’ ability or willingness to pay dividends. In the first half of 2020, the trust’s income fell by 26% (compared with the same period in 2019). The second half of 2020 saw some recovery as income fell by 4% (compared to the same period in 2019). Currently around 8% of the trust is not paying dividends, but Luke expects these to be reinstated.

In the year to the end of June 2020 the trust paid dividends totaling 34.25p per share, a 0.7% increase from the prior year. The trust could do this by using revenue reserves. These are used by investment trusts to boost income during tough times for the market. The Board, which oversees the running of the trust for investors, has indicated the dividend is likely to increase again (for the 48th consecutive year) for the year ended June 2021.

In the first half of 2020 the trust’s share price fell 12.6%* compared to -17.5% for the FTSE All Share. Companies whose prospects were linked to the health of the economy (cyclical sectors) were in the eye of the storm and fared the worst, such as travel & leisure, banks and oil.

The second half of 2020 saw markets recover. Positive signs of a COVID vaccine, a Biden victory in the US presidential election and the perceived resolution of Brexit helped to improve investor sentiment. Some of the more cyclical sectors such as mining, travel & leisure and general retailers performed strongly whilst healthcare, utilities and oil & gas underperformed. In this period the trust returned 11.6% in share price terms vs the FTSE All Share return of 9.3%. Having less than the index in consumer services and more in healthcare hurt performance. On the positive side good stock selection in industrials was helpful.

Over the last 12 months to the end of February 2021, the trust’s share price returned 3.2% vs the FTSE All Share return of 3.5%. Investment in oil & gas and industrials added the most performance, whilst consumer goods & services detracted the most. Past performance isn’t a guide to future returns.

Annual percentage growth
Feb 16 -
Feb 17
Feb 17 -
Feb 18
Feb 18 -
Feb 19
Feb 19 -
Feb 20
Feb 20 -
Feb 21
Murray Income Trust 22.2% 4.2% 6.0% 13.8% 3.2%
FTSE All-Share 22.8% 4.4% 1.7% -1.4% 3.5%

Past performance is not a guide to the future. Source: *Lipper IM to 28/02/2021.

Find out more about Murray Income trust, including charges

Murray Income trust key information document

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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