27th March 2026
When the board of Murray Income announced the result of its almost 5 month long strategic review in November last year there seems to be a collective shrug of the shoulders from the investment trust community. At first glance maintaining the same investment policy and switching one UK equity income manager (Aberdeen) for another (Artemis) appeared uninspiring with some analysts anticipating some form of corporate activity such as a merger with a peer with a cash exit. Furthermore, it was announced that the Artemis management team is running the mandate in exactly the same way as its flagship open-ended Artemis Income fund, so not making full use of the closed-ended structure. Despite the underwhelming nature of this outcome, ever curious, we did some further research and met with the management team and actually believe there is a strong investment case in Murray Income today – a classic case of perception versus reality.
At £900m market cap, the Board felt it had sufficient scale and liquidity to remain relevant and didn’t feel the need to be consolidated. Perhaps it also looked at the precedent of Temple Bar when it changed managers but kept the same investment policy and that has performed excellently since Redwheel took over the reins in 2020 and now consistently trades close to NAV. We have written before (see link here) about the risk of boards acting hastily and materially changing the strategy when it might not be what shareholders have signed up for.
The management team, Adrian Frost, Nick Shenton and Andy Marsh, supported by analyst Jamie Lindsay, has one of the longest and best track records in the UK Equity Income sector. Frost has been managing UK Income strategies since the1980s and the Artemis Income fund since 2002, over which time it has outperformed the peer group by over 250% (Source FE Analytics; GBP total return, Artemis Income +620% vs IA UK Equity Income Sector 364%, 02/01/2002 to 20/03/2026). In the Murray Income presentation, Artemis promoted that the strategy has outperformed its UK benchmark in 97% of 5 year rolling periods since launch.
The reason for highlighting this impressive performance track record is not because we are on commission from Artemis, but because it makes the opportunity in Murray Income very appealing for a number of reasons.
First, the management fees on Murray Income will be lower than Artemis Income. Murray Income’s charging structure will be 0.50% based on the lower of market cap and NAV with a 9 month fee holiday from March, effectively Artemis will be managing it for nothing for the rest of 2026. The OCF for the institutional share class (I Acc) for Artemis Income fund is 0.80%. So if performance of the underlying portfolios are exactly the same, Murray Income shareholders will marginally outperform.
Second, while on the subject of OCFs, since the revised cost disclosure rules announced last year, investors should rightly not be aggregating investment trust ongoing costs (or ‘expenses’ as we prefer to label them) in their own OCFs. On the other hand, the open-ended Artemis Income fund’s 0.80% OCF would rightly contribute to an investor’s OCF, since these costs are charged to the investor. A savvy investor may wish to access Adrian Frost and team via a structure in which management expenses are already reflected in the unit of investment (the share price).
Third, although the Artemis team will manage Murray Income with an identical portfolio to Artemis Income, they intend to utilise modest gearing of 8-10% to enhance returns and support the trust’s yield. For investors who believe that this UK Income strategy will generate positive returns over the coming years, they will be better off in Murray Income than Artemis Income.
Fourth, Murray Income has earned the status of Dividend Hero for having grown the dividend in 52 consecutive years. The Artemis team is committed to maintaining that record which is possible by taking advantage of the trust’s revenue reserves to support the natural dividend income from the underlying portfolio. According to Artemis website, the current historic yield of Murray Income is 4.0% compared to Artemis Income’s 3.25%.
Finally, Murray Income is currently trading on an 8% discount, reflecting the disappointing past performance rather than the turnaround potential under new management and the cheaper way of accessing an almost identical portfolio to the open-ended fund. We therefore believe there is a good chance of that discount narrowing close to NAV given the aforementioned reasons and when compared to the ratings of similarly large UK equity income investment trusts with good performance records (Temple Bar, Law Debenture to name but two). If one assumes that this discount will narrow into par over 3 years, that is an additional 2.6% per annum return. Adrian has outperformed the UK stock market by c. 1.7% a year for nearly 25 years. An additional 2.6% is a huge bonus, plus the 0.3% p.a. saving from the reduced management fee. Relative to buying a UK equity index tracker, buying Murray Income on a discount looks like great risk/reward.
So if you are one of the many investors in the £5bn Artemis Income fund or perhaps in another large cap UK Equity Income strategy or even a UK equity tracker, we think Murray Income Trust is much more appealing today considering its competitive fee structure, commitment to an attractive and growing dividend yield, modest gearing and an 8% discount – and it doesn’t contribute to your own OCF. Not investment advice – do your own research!
Daniel Lockyer – Senior Fund Manager
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For professional advisers only. This article is issued by Hawksmoor Fund Managers which is a trading name of Hawksmoor Investment Management (“Hawksmoor”). Hawksmoor is authorised and regulated by the Financial Conduct Authority. Hawksmoor’s registered office is 2nd Floor Stratus House, Emperor Way, Exeter Business Park, Exeter, Devon EX1 3QS. Company Number: 6307442. This document does not constitute an offer or invitation to any person, nor should its content be interpreted as investment or tax advice for which you should consult your financial adviser and/or accountant. The information and opinions it contains have been compiled or arrived at from sources believed to be reliable at the time and are given in good faith, but no representation is made as to their accuracy, completeness or correctness. Any opinion expressed in this document, whether in general or both on the performance of individual securities and in a wider economic context, represents the views of Hawksmoor at the time of preparation and may be subject to change. Past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you originally invested. FPC26677.
