Murray International Trust PLC (MYI) — Investment Research Note

Executive summary

Murray International Trust is a UK-listed, closed-end investment trust managed by abrdn that invests globally in quality, dividend-paying equities (plus a small bond sleeve) with the objective of growing income and capital ahead of inflation. Across the period, NAV total return has been modest-to-solid (+0.9% FY20, +14.1% FY21, +8.8% FY22, +8.6% FY23, +8.1% FY24, +6.0% H1-25), the trust has reduced gearing from £200m to £110m of long-dated fixed-rate loan notes at a blended 2.56%, and has consistently grown its dividend (20 consecutive years — "Dividend Hero" status) 2025-08 half-year. The most important point for valuation today is that MYI is an investment trust whose fair value is anchored by its published NAV — at the latest disclosed market cap (£2,032.9m), the shares trade at roughly NAV par or a small premium, leaving no meaningful discount to exploit.

Fair value estimate

• Methodology: For a listed investment trust the appropriate valuation is the published net asset value, with a sensible range around it reflecting the typical premium/discount band at which the shares change hands plus modest NAV growth from the H1-25 reporting date.
• NAV anchor: 287.9p NAV per Ordinary share at 30 June 2025; 303.1p at 13 August 2025 2025-08 half-year.
• Discount/premium range: MYI has traded between roughly +3% premium and -9% discount over the period covered. A reasonable central range applies -5% to +2% versus a rolled-forward NAV of ~305p.
• Fair value range: 290p – 311p per Ordinary share, implied market cap £1,718m – £1,843m (using 592.6m shares ex-Treasury).
• Latest disclosed market cap: £2,032.9m, which at 592.6m shares implies a share price of ~343p — a meaningful premium to NAV not seen at any point in the filings; this either reflects post-period NAV growth (likely, given strong equity markets) or a market price ahead of any disclosed NAV.
• Implied position: at £2,032.9m the shares look fully valued to modestly expensive vs. recent NAV; absolute downside to mid fair value (~£1,780m) is c. -12% to -15%.

Sector context

• Confirmed sector classification: Financials / Financial Services (closed-end investment vehicle).
• Quality/leverage profile: above peer average on dividend track record (20 yrs of growth), in line on NAV discount control (active buybacks, recently issued shares from Treasury when at premium), in line on fees (OCR 0.51% — competitive for a global trust) 2025-08 half-year. Gearing is modest (5.8% net, all long-dated fixed-rate loan notes at 2.56%).
• Listed peers: Bankers Investment Trust (BNKR), Alliance Trust (ATST), F&C Investment Trust (FCIT), Henderson International Income (HINT) — the last two are closest matches given the global/income tilt.

Investment thesis (3 bullets)

• Globally diversified high-quality income compounder with a 20-year track record of rising dividends and £78.5m of distributable revenue reserves backing the dividend (1.12× 2024 distribution) 2025-08 half-year. Income receipts rose 13% YoY in H1-25 to £52m, with 22 of 25 portfolio companies that have declared having raised their dividend 2025-08 half-year.
• Sensible, value-conscious portfolio construction — large weights in Philip Morris, TSMC, Broadcom, CME, ASUR, OCBC, AbbVie, BE Semi, Zurich Insurance, Cisco 2025-08 half-year. Manager actively trims winners (Philip Morris, Broadcom, Siemens, Zurich) and recycles into underperformers with sound fundamentals (Merck, BMS, Pernod, Diageo) — a disciplined contrarian-income approach.
• Cheap, long-dated, fixed-rate gearing: £110m of loan notes at 2.56% weighted cost, maturing 2031 and 2037, materially below current market rates — accretive to NAV in a higher-rate world 2025-08 half-year.

Key risks (3 bullets)

• No structural discount to exploit at the current price. The shares closed H1-25 at only -2.7% discount and have at times traded above NAV; this is materially tighter than the long-term average and reduces the margin of safety 2025-08 half-year.
• Unhedged FX risk — over 90% of assets in non-GBP currencies 2025-08 half-year. The 2024 income picture was hurt by sterling strength; reverse-direction moves are equally possible.
• Manager succession and benchmark change — long-tenured lead PM Bruce Stout retired in June 2024 2024-08 half-year; benchmark switched to MSCI ACWI High Dividend Yield from 1 July 2025 2025-08 half-year. Performance attribution and accountability are mid-transition.

Operating leverage

This is the critical AI-strategy point. An investment trust has essentially no operating leverage in the sense the buyer wants. Its P&L is dominated by (a) gains/losses on investments and (b) dividend income, both of which scale linearly with portfolio NAV. Costs are modest and proportional (management fee 0.5%/0.4% tiered on net assets) 2025-08 half-year, note 11. The OCR has been flat at 0.51%-0.53% across the period. If NAV grew 10-20% above plan, operating profit (i.e. portfolio return after costs) would grow roughly proportionately — the cost base does not produce explosive incremental margin because the fees themselves scale with NAV. There is no fixed-cost site, network effect, or SaaS-style margin trajectory to inflect. Operating leverage score will therefore be low.

Value-trap signals

None identified. The trust has a long-dated dividend record, modest gearing, fully reserved dividend cover, no related-party concerns, no regulatory threats, transparent quarterly disclosure, and a portfolio composed entirely of liquid Level 1/2 securities.

Earnings vs. expectations

Investment trusts do not "guide" results in the corporate sense, and there is no analyst consensus for NAV. The relevant comparison is NAV total return vs. the reference index: H1-21 +8.7% vs. +11.4% (miss), FY21 +14.1% vs. +20.0% (miss), H1-22 +3.8% vs. -10.5% (substantial beat in down market), FY22 +8.8% vs. -7.3% (substantial beat), H1-23 +2.2% vs. +7.9% (miss), H1-24 +5.5% vs. +12.2% (miss), FY24 +8.1% vs. +19.8% (large miss), H1-25 +6.0% vs. +1.0% (beat) multiple half-yearly reports. Pattern: outperforms in volatile/risk-off markets (2022, H1-25) and underperforms in narrow, tech-led bull markets (2021, 2024). This is consistent with a value/income style and is by design — but it explains why the discount has at times widened.

Conviction

4 — high. Investment-trust valuation is unusually clean: NAV is published, the portfolio is overwhelmingly Level 1 marketable securities, and the discount-to-NAV history gives a defensible fair-value range. The factors that anchor conviction: (i) all assets at quoted bid prices on recognised exchanges; (ii) consistent reporting, low debt at known fixed rates; (iii) the entire valuation is essentially "NAV plus or minus a discount", not a contested cash-flow forecast. What limits conviction to 4 rather than 5: (i) NAV moves daily so my range is sensitive to the date of measurement (post-H1-25 NAV may already be well above 287.9p); (ii) the current market cap implies a price meaningfully above the last disclosed NAV and I cannot verify whether the market price is reflecting NAV growth or transient momentum.

Overall assessment for this investor

MYI is poorly suited to the stated strategy. It is a diversified income trust with exposure to AI receivers (TSMC, Broadcom, BE Semi, Samsung, Infosys, Cisco) but these are minority holdings inside a 60-name global income portfolio 2025-08 half-year. It offers virtually no operating leverage — its return is the weighted return of its underlying holdings, less ~0.5% costs. Valuation is fair-to-slightly-rich with no discount to exploit. Downside protection is good (high-quality balance sheet, modest gearing) but the upside is mechanically capped at portfolio NAV growth. Score lands firmly in the "partial fit / low fit" zone.