Skip to main content

Murray Income Trust PLC

 

Objective

The objective of Murray Income Trust PLC is to achieve a high and growing income combined with capital growth through investment in a portfolio of UK equities.

Manager's Monthly Report

October 2008


The FTSE All-Share Index ended September over 13% lower in a torrid month for equities. Systemic risk concerns rose to the fore during the month with the bankruptcy of Lehman Brothers and the effective nationalisation of Fannie Mae, Freddie Mac and AIG in the United States. While in Europe authorities were forced to act in Germany, the Benelux and Iceland. In the UK, the issues were manifested in the nationalisation of the Bradford & Bingley. Commodity prices fell sharply reflecting concerns over global growth and the unwinding of leveraged positions. Reflecting this, the Mining sector performed extremely poorly during the month while unsurprisingly the more defensive areas of the market such as the Food & Drug Retail and Tobacco sectors outperformed. Domestic economic news flow continued to be weak. CPI inflation hit 4.7% in August prompting the MPC to leave interest rates unchanged at 5% at their September meeting although David Blanchflower remained a lone voice on the MPC calling for a 50bp rate cut. The PMI survey data for both manufacturing and services were lower than expected. House prices continued to fall with the Nationwide reporting a monthly decrease of 1.7% during September, the 11th month of falls resulting in an annual decline of 12.4%. We used the weakness in the market to top up attractively valued core holdings including Tesco, Venture Production and Millennium & Copthorne. In addition, we initiated a small position in Rolls-Royce. We feel that despite the weak operating environment, the company which has an experienced management team, long order book and strong balance sheet had been unjustifiably sold down given its longer term prospects. The purchases were partly funded by the disposal of the holding in HMV that had performed very strongly on a relative basis. We also sold our put protection that was due to expire in the middle of the month and reinvested part of these proceeds while also purchasing a new put at a lower level (since the month end this has also been sold). Finally, we purchased a reverse convertible in HSBC which generates additional income for the Trust. Volatility is likely to remain a significant characteristic of the market, however, where opportunities present themselves we will continue to add to our holdings which we believe are attractively valued. At the close of business on 7 October 2008 the Company no longer has any portfolio protection.


Source: Monthly Factsheet Aberdeen Asset Managers Limited