Broker Canaccord Genuity has reinstated its ‘buy’ recommendation for Bruce Stout’s £1.4bn Murray International trust following its difficult 2013.
Alan Brierley, director, investment companies, said Mr Stout’s “focus on quality and capital preservation resulted in material underperformance” and had hit the trust, as had its focus on emerging market stocks during a turbulent time for developing countries’ stockmarkets.
He said 2013 had been “brutal” for Murray International, largely because of its overweight stance in emerging markets and Asia Pacific ex Japan, while being underweight the US.
“The manager believes the economic climate has become increasingly distorted, with developed markets benefiting from authorities layering more debt on top of existing debt,” Mr Brierley said.
“This has resulted in severely stretched valuations, despite anaemic earnings growth, with US corporates struggling to deliver mid-single digit profit growth despite significant buybacks, and aggregate earnings in Europe actually falling.”
The analyst said the trust’s shares had also returned to a “more sensible” premium. The trust’s shares have been trading above the net value of the trust’s assets for a sustained period.
“Last year’s experience has blown some froth off the valuation,” Mr Brierley said.
