Manager of £1.6bn trust limits UK exposure

Manager of £1.6bn trust limits UK exposure

Bruce Stout, who runs the £1.6bn Murray International investment trust, currently has his lowest ever exposure to UK and European shares.

Mr Stout has run the trust for 35 years and, speaking at an Association of Investment Companies (AIC) lunch in London this week he said ageing populations, high debt levels and problems in the banking system mean the UK will struggle to grow its economy significantly in the years ahead, while emerging markets, which have younger populations and banks in better financial health, will grow at a much faster pace.

The trust has 34 per cent invested in Asia and 8 per cent in the UK.

Mr Stout said: “I think we are heading for a period where Asia will be the envy of the world again in terms of prosperity.

"It was like that [in the past], China and India were the envy of their world for hundreds of years and then imperialism came along and that changed.

"But it is changing back now, and there are so many good companies in Asia, it is harder to find good companies in the UK or Europe, that's why we have the lowest exposure in my thirty-five years managing the trust.” 

The impact of the trade dispute between the US and China has hurt the performance of many Asian equity markets in recent years and this has had a negative impact on the performance of the Murray International trust, which has returned 17 per cent over the past three years, compared with 30 per cent for the average trust in the sector in the same time period.

Mr Stout also acknowledged that if US interest rates rise, this would have a negative impact on his emerging market investments, but he believes both of those are short-term considerations, and Asia will outperform the UK over a longer period of time.

Keith Wade, chief economist at Schroders, said he expects the growth rate of emerging market economies to pick up in 2020 alongside a general pick up in global growth and with an easing of trade tensions between China and the US.

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