Murray Income Trust Plc Q3 2026 update

Objective

The investment company aims to achieve a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. 

Market review

Like much of this year, the three-month period to 30 September was a challenging and eventful time for investors. Companies borrowed huge amounts and continued to spend lavishly on artificial intelligence (AI), while some large, privately owned companies started selling their shares to the public. Meanwhile, investors became more concerned about governments’ finances. Interest rates on longer-term government bonds, such as those with 10 years or more until maturity, rose sharply. 

Performance review

Artemis took control of the trust on 2 March 2026 and changed about 75% of the portfolio that month. From 1 April, at which point the transition was largely complete, until 30 September, the trust achieved a NAV return of 10.1% and a share price return of 13.2%. (NAV stands for net asset value, i.e. the value of the underlying investments.) The FTSE All-Share index¹, a benchmark against which the trust compares its performance, gained 7.2%.

After a strong start to Artemis’ tenure between April and June, the most recent three-month period has been disappointing. The trust’s assets delivered a slightly positive return of 0.9% and its shares rose 1.4%. Both were behind the FTSE All-Share index, which gained 2.4%. 

The trust’s shares ended September on a 6.2% discount to its NAV, compared with 6.7% on 30 June. (In other words, the share price was 6.2% lower than the value of the assets the trust holds, per share.)

What the trust didn’t own was just as important as what it did, when it comes to explaining how performance differed from the benchmark. Some of the UK’s largest companies, many of which we do not invest in, saw significant share price gains in the third quarter. We think some of these shares now look quite expensive and we believe better opportunities exist away from the UK’s ‘biggest beasts’. 

The FTSE All-Share index has more money in oil, gas and mining companies than our portfolio does, which was detrimental to our relative performance. Oil & gas companies had a good quarter due to higher energy prices. Meanwhile, miners benefited from growing demand linked to AI, given that building data centres requires large amounts of metals and other raw materials.

Performance to 30 September 2026

Past performance is not a guide to the future.

Source: Lipper Limited/Artemis to 30 September 2026. All figures show total returns with dividends and/or income reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the trust. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class. 

*Artemis was appointed as manager of Murray Income Trust on 2 March 2026. Since then, the trust has delivered an NAV return of -0.3% and a share price return of 1.0%, versus 0.1% for the FTSE All-Share. Artemis repositioned the portfolio holdings during March and the new portfolio was in place by 1 April 2026. Performance since repositioning is shown in the table above as six months. 

Positive contributors

RS Group provides products and services to industrial customers. Its multi-year improvement plan, which includes investments in technology and processes, is bearing fruit. The company released a trading update ahead of its annual general meeting in July, showing it had made a good start to the 2027 financial year across all regions².

EasyJet shares performed strongly as two US private equity firms fought to acquire the airline. It rejected four proposals from Castlelake before agreeing to a sweetened offer in early July, only for Apollo Global Management to subsequently enter the race with a higher bid. 

Aviva was another strong performer. We think it could grow further by cross-selling products to existing customers; of Aviva's 25 million customers, only 7 million currently have two or more policies³. We would also point to Aviva’s 6% dividend yield⁴, which we think the company could increase.

Holdings that underperformed

IG Group’s share price fell after the company suspended its share buyback programme⁵ and bought Underdog, a US sports betting app. Although this acquisition brings an element of uncertainty to the company’s future, which appears to have worried investors, we see it as a positive. Underdog doubles how much IG earns in the US⁶ and gives the company a foothold in an area of rapid growth.

ITV agreed to sell its broadcast and streaming business to Sky in July. However, the regulatory assessment of this deal is expected to take some time, which is one of the reasons behind lacklustre share price performance. 

If the Sky transaction completes, ITV will consist solely of ITV Studios, which is one of the largest production houses in the world. It has around £2bn in annual turnover and a catalogue of 100,000 hours of content⁷, spanning some highly successful television productions, including the second series of The Gentlemen. 

Imperial Brands shares fell as the market reacted negatively to news of large-scale job losses, reportedly numbering in the thousands⁸. We would counter that cutting costs makes sense in a declining industry. We would also highlight the company’s 6% dividend yield (which is above the stock market’s average) and considerable share buybacks. 

Activity

We added three new companies to the portfolio this quarter: British American Tobacco, Standard Chartered and Marks & Spencer.

We are under no illusions about the structural and regulatory risks faced by the tobacco industry. However, we think British American Tobacco’s next generation products have underappreciated growth potential. For instance, its Velo brand (nicotine pouches), which was launched in 2018, is now sold in 49 markets⁹.

Standard Chartered has a strong foothold in fast-growing economies in Asia. We expect its wealth management business to account for a larger proportion of profits going forward.

We think Marks & Spencer could become more profitable if it invested in improving its technology, warehouses and distribution. The quality of its ‘front end’ (products and customer service) is higher than its ‘back end’ (the infrastructure supporting the business), in our view. If M&S can close that gap and become more efficient, we think continued sales growth could lead to better business performance.

Outlook

We believe the trust’s portfolio possesses attractive characteristics. Its valuation is lower than the broader UK market, the income it generates through dividends is higher¹⁰ and the majority of companies in the portfolio are buying back shares. 

Some companies are also creating value through mergers and acquisitions. Informa's purchase of Clarion Events is a good example; we think this deal will reinforce Informa’s position as the world's leading events organiser.

To make the most of the investment trust structure, we are using a modest amount of gearing (borrowing to invest). This should enable us to increase income and total returns without taking on too much additional risk. It is like steering a boat with a slightly bigger sail, and indeed, this has been our experience of managing the trust so far.

Performance for the past five years, prior to Artemis assuming investment management

Past performance is not a guide to the future

Source: Lipper Limited/Artemis to 31 December 2025. NAV figures show total returns with dividends reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the trust. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class.