The Tip Sheet

The Telegraph thinks RIT Capital Partners “shares are currently extremely good value” , while the Investors Chronicle says Murray International is “is a diversifier that has proved its worth in difficult times”

ByFrank Buhagiar

Questor: This trust will make good after worst slump in 36 years

The Telegraph’s tipster Questor is reversing its RIT Capital Partners (RCP) sell recommendation following the flexible investor’s latest set of finals. Questor believes the full-year results suggest the fund may be emerging from its multi-year slump – RCP has underperformed the MSCI index over the last three, five and 10 years and since November 2021, the shares are off 36% over concerns regarding its large private assets weighting. What’s more, RCP has failed to hit its annual target return of at least 3% above the consumer price index over three years – quite a reversal for a fund that has delivered a 3,343% return since listing in 1988.

What was in the finals to trigger the upgrade? Not the headline 3.2% increase in assets which was well off the 7% rise in inflation, let alone the MSCI All Country World’s 18.4% return. No, Questor writes, “the results provided reassurance”, specifically the 18.1% return from the 40% or so invested in quoted stocks. Not only is this in line with the MSCI, but it was achieved despite being significantly underweight the ‘Magnificent Seven’ mega-tech giants that drove markets higher last year. There was reassurance too with regards to the fund’s private investments: a 6% decline in value was less than had been feared; there are also plans to reduce the proportion of the portfolio invested in private investments to between 25% and 33% over the next two years.

But, according to Questor: “Best of all, RIT has been actively buying back shares, spending £184m on its cheap stock in the past 15 months. That boosts shareholder returns a little, but more importantly shows the board’s conviction in the valuation of RIT’s assets and a belief that the shares are undervalued.” All of which leads the Column to conclude “the shares are currently extremely good value and with the company focused on improving shareholder returns we are happy to reinstate our previous recommendation. Questor says: buy”.

Investors’ Chronicle: An income fund with a contrarian bent

The income fund in question? Murray International (MYI).

The contrarian bent? The global equity income trust, “does not cling to the US or the Magnificent Seven as a way of chasing performance, but instead looks further afield – 28 per cent of the portfolio is based in Europe, a similar proportion is in North America and a slightly lower allocation is in the Asia Pacific region. Latin American companies also crop up here and there.”

And MYI is not just diversified by country, but by sector too as demonstrated by the presence of the likes of Taiwan Semiconductor Manufacturing, TotalEnergies, tobacco giant Philip Morris and Unilever among its top holdings. Having a contrarian bent has meant that the fund’s performance can diverge from that of markets – over the last five years, the fund has clocked up a 35% return compared to the MSCI World’s 75% (sterling). But as the Chronicle points out, “investors are being paid to wait” thanks to a 4.7% dividend yield. According to the article, shareholders who invested £10,000 into MYI  in 2022 would have received £800 in dividends during 2023, that’s more than any other fund in the AIC’s Global and Global Equity Income sectors.

So, while The Chronicle points out: “There is no denying the risks involved in backing Asian equities or the frustration that can come from ignoring some of the hottest stocks in the US today”, MYI  a diversifier that has proved its worth in difficult times, and one that has continued to pay out a handsome income through thick and thin.”