Bruce Stout: why I think UK shares are not a buy

TL;DR

Murray International Investment Trust's manager discusses the attractions of investing in emerging markets and provides stock examples.

Transcript

hello today i'm speaking to bruce stout full manager of the murray international investment trust money international has just over 40 of its assets in the emerging markets and the asia pacific regions this is much higher than other global investment trusts what are the main attractions of investing in that part of the world and could you run throu... Read More

Key Insights

• 🔬 Murray International Investment Trust focuses on bottom-up investing rather than allocating funds to specific regions or countries.
• 😮 The attractions of investing in emerging markets and the Asia Pacific regions include rising incomes, demographic growth, and opportunities in infrastructure and consumption.
• 🥹 The Trust holds stocks like Taiwan Semiconductor and Grupo Aeroportuario del Sureste as examples of high-quality businesses.
• 🛄 The Trust aims for a diversified portfolio with various qualities in different companies, including managing cyclical exposures.
• 📔 Underperformance compared to other funds can be attributed to the Trust's policy of covering dividends with underlying income, while other funds may pay dividends out of capital.
• 🌏 The outlook for dividends in Asia is expected to improve due to stronger earnings, while other parts of the world may vary.
• ⛔ The UK market is considered cheap, but Murray International has limited exposure due to challenges with dividend-paying companies and vulnerability in the bond market.

Questions & Answers

Q: What are the main attractions of investing in emerging markets and the Asia Pacific regions?

The main attractions include rising incomes, demographic growth, and new investment opportunities in infrastructure and consumption. These markets offer potential for high growth and opportunities that haven't been fully explored.

Q: Can you provide examples of stocks held by the Murray International Investment Trust?

Two examples are Taiwan Semiconductor, the largest holding of the Trust, known for its strong financials and global demand for semiconductors. Another example is Grupo Aeroportuario del Sureste, which operates popular Mexican airports and has a strong balance sheet and consistent dividend growth.

Q: Are there specific qualities that the Trust looks for in every company?

The Trust aims for a diversified portfolio, so each new business should bring something different. While preferential qualities include high gross margins, no debt, and strong cash generation, they also manage some cyclical exposures for unique investment opportunities.

Q: What are the reasons behind the Trust's underperformance compared to other global equity income funds?

The Trust's high yield is covered by underlying income, which is not the case for many other funds in the sector. Some funds pay dividends out of capital, providing more investment flexibility. Temporary underperformance can occur due to market conditions and can reverse quickly.

Summary & Key Takeaways

• Murray International Investment Trust focuses on bottom-up investing and doesn't allocate funds based on regions or countries.

• The main attractions of investing in emerging markets and the Asia Pacific regions are rising incomes, demographic growth, and new investment opportunities in infrastructure and consumption.

• The Trust holds stocks like Taiwan Semiconductor, a high-quality business with strong growth potential, and Grupo Aeroportuario del Sureste, which operates major Mexican airports.