Global income trusts trail peers

Global income trusts trail peers

Global equity income investment trusts have been among the worst performers of the past 12 months relative to open-ended funds, new data shows.

A comparison of trust share prices with open-ended net asset values (NAVs), conducted by Winterflood, found that global equity income companies were the worst performers in aggregate.

This was largely due to the sharp switch in sentiment seen with regard to the £1.1bn Murray International Trust run by Bruce Stout.

Article continues after advert

But Winterflood also noted that “most members of the [global equity income] peer group” had underperformed in the past 12 months, though the Scottish American trust was a notable exception.

In aggregate, share prices in the sector trailed the NAV performance of their unit trust equivalents by 10.5 percentage points in the year to the end of February.

Industry view:

Simon Elliott, head of investment research at Winterflood, noted that while Murray International historically traded at a considerable premium to its peers, the trust had more recently suffered from positions in emerging markets and an underweight to the US.

Anthony Leatham, head of investment trust research at Peel Hunt, said: “While I would agree that comparing open-ended fund returns with the share price returns is the fairest representation of the investor experience, the NAV performance is also a relevant measure of performance and one that I would place reliance on when comparing manager skill across open- and closed-ended funds.”

Some analysts noted that widening discounts in the global equity income space might represent a buying opportunity, given the travails of trusts in general at the start of 2016.