The decision to go underweight Japan has been hailed a key driver of performance on the Murray International trust by its chairman Kevin Carter.
The £1.5bn trust, run by Aberdeen’s Bruce Stout, has been underweight Japan in spite of the country being more increasingly popular with investors given the government’s pledged support for the economy.
But Murray International has just 2.1 per cent in Japan, a move its chairman said helped it produce a strong performance in the first six months of its financial year.
“By far the largest contributing factors to relative benchmark outperformance on an asset allocation basis were underweight exposures to the UK and Japan,” Mr Carter said. “Indeed, in sterling terms, Japan proved to be the only negative performing market among the major benchmarks.”
Mr Carter said Mr Stout had favoured Asia, Europe and Latin America, adding that overweight exposure to these regions had helped the trust.
In the six months to June 30, the trust delivered a share price total return of 3.8 per cent compared with a rise of 2.8 per cent by its 40 per cent FTSE World UK and 60 per cent FTSE World excluding UK benchmark, according to its half-year results.
However, Mr Carter acknowledged the trust’s “significant underweight” in the US proved “negative on an asset allocation basis” given the region delivered one of its strongest returns during the period.
In Europe, the trust has “close to double” benchmark exposure and holdings in retailer Casino, oil company Total, Swedish industrial company Atlas Copco and Sweden-based bank Nordea “produced the largest relative positive impact from stock selection”.
Mr Carter said that weakness in emerging market bonds early in the year “presented the opportunity to increase the portfolio’s fixed income exposure”.
“Consequently, close to 4 per cent of gross assets were moved from equities to bonds, thus reducing the overall level of equity gearing to 102 per cent at the period end,” he said.
