Aug. 24 (Bloomberg) -- Bruce Stout’s investments in stocks
and bonds worldwide made his fund a top performer during the
past five years. Now, he’s trying to preserve capital as policy
makers run out of ways to stimulate their economies.
The manager of Aberdeen Asset Management Plc’s 985 million-
pound ($1.62 billion) Murray International Trust expects
developed economies to “muddle through” the next decade, with
“barely positive” rates of growth, he said in an interview at
his office in Edinburgh.
“People are getting used to the fact that there are no
more rabbits to be pulled out of the hat in terms of trying a
quick fix, and adjusting your standard of living downwards is a
very painful process,” Stout said.
Central bankers from around the world are preparing to meet
in Jackson Hole, Wyoming, this week to consider ways of
preventing developed economies sliding back into recession. The
rout in stocks the past four weeks has wiped more than $8
trillion from market values and the MSCI World Index is close to
its lowest in almost a year.
“We don’t think we can make any money -- we’re trying not
to lose money in this environment,” Stout said. “And if you
don’t want to lose any money, what are safe havens?”
and bonds worldwide made his fund a top performer during the
past five years. Now, he’s trying to preserve capital as policy
makers run out of ways to stimulate their economies.
The manager of Aberdeen Asset Management Plc’s 985 million-
pound ($1.62 billion) Murray International Trust expects
developed economies to “muddle through” the next decade, with
“barely positive” rates of growth, he said in an interview at
his office in Edinburgh.
“People are getting used to the fact that there are no
more rabbits to be pulled out of the hat in terms of trying a
quick fix, and adjusting your standard of living downwards is a
very painful process,” Stout said.
Central bankers from around the world are preparing to meet
in Jackson Hole, Wyoming, this week to consider ways of
preventing developed economies sliding back into recession. The
rout in stocks the past four weeks has wiped more than $8
trillion from market values and the MSCI World Index is close to
its lowest in almost a year.
“We don’t think we can make any money -- we’re trying not
to lose money in this environment,” Stout said. “And if you
don’t want to lose any money, what are safe havens?”
Growth, Income
The Murray International Trust was founded in 1907 for
wealthy Scots to invest in railroad bonds across the Americas.
It’s the best-performer of eight comparable closed-end
funds over the past five years, according to data from Chicago-
based research firm Morningstar Inc. Each so-called global
growth and income fund invests worldwide in companies that pay
dividends as well as providing returns on their stock.
The trust returned 84.8 percent in the five years to Aug.
16 compared with the average in its peer group of 38.4 percent,
figures from Morningstar showed. It ranked second in a three-
year time span, while this year it’s slipped to fifth place,
losing 3.6 percent.
“This negative sentiment is not finished yet. There are a
lot of hideous things still to come out,” Stout said. “The
public in the developed world hasn’t fully grasped the concept
of austerity and it’s a painful thing that takes a long time.”
Record-low yields on U.S. Treasuries that show traders
expect Federal Reserve Chairman Ben S. Bernanke to signal a
third round of asset purchases.
The yield on the 10-year Treasury has fallen 42 basis
points, or 0.42 percentage point, to 2.14 percent since Aug. 5
when Standard & Poor’s Ratings Services cut the U.S.’s AAA
credit rating for the first time because of the record budget
deficit. S&P had said earlier that anything less than $4
trillion in cuts would jeopardize the rating.
wealthy Scots to invest in railroad bonds across the Americas.
It’s the best-performer of eight comparable closed-end
funds over the past five years, according to data from Chicago-
based research firm Morningstar Inc. Each so-called global
growth and income fund invests worldwide in companies that pay
dividends as well as providing returns on their stock.
The trust returned 84.8 percent in the five years to Aug.
16 compared with the average in its peer group of 38.4 percent,
figures from Morningstar showed. It ranked second in a three-
year time span, while this year it’s slipped to fifth place,
losing 3.6 percent.
“This negative sentiment is not finished yet. There are a
lot of hideous things still to come out,” Stout said. “The
public in the developed world hasn’t fully grasped the concept
of austerity and it’s a painful thing that takes a long time.”
Record-low yields on U.S. Treasuries that show traders
expect Federal Reserve Chairman Ben S. Bernanke to signal a
third round of asset purchases.
The yield on the 10-year Treasury has fallen 42 basis
points, or 0.42 percentage point, to 2.14 percent since Aug. 5
when Standard & Poor’s Ratings Services cut the U.S.’s AAA
credit rating for the first time because of the record budget
deficit. S&P had said earlier that anything less than $4
trillion in cuts would jeopardize the rating.
‘Psychological Importance’
Bond yields can fall further because the economic outlook
is so poor, Stout said on Aug. 17.
“The downgrade is of more historical and psychological
importance,” said Stout, 52. “It won’t get its AAA status back
in my lifetime. How do you fix a budget deficit like that?”
Stout said he bought and sold the fewest securities for a
decade in the first six months of this year. He invested in HSBC
Holdings Plc, Europe’s largest lender and the first U.K. bank
the trust has owned since selling out of the stock in 2004
following its acquisition of Household International Inc. in the
U.S. HSBC shares have lost 21 percent this year.
Last year, Stout bought or added to Nestle SA, the world’s
biggest food company, and Swiss drug makers Novartis AG and
Roche Holding AG. The fund has benefited as the Swiss franc
gained 12 percent against the pound this year while their shares
are all down. At the same time, he sold shares in companies
including miner Rio Tinto Plc, which is down 24 percent in 2011.
is so poor, Stout said on Aug. 17.
“The downgrade is of more historical and psychological
importance,” said Stout, 52. “It won’t get its AAA status back
in my lifetime. How do you fix a budget deficit like that?”
Stout said he bought and sold the fewest securities for a
decade in the first six months of this year. He invested in HSBC
Holdings Plc, Europe’s largest lender and the first U.K. bank
the trust has owned since selling out of the stock in 2004
following its acquisition of Household International Inc. in the
U.S. HSBC shares have lost 21 percent this year.
Last year, Stout bought or added to Nestle SA, the world’s
biggest food company, and Swiss drug makers Novartis AG and
Roche Holding AG. The fund has benefited as the Swiss franc
gained 12 percent against the pound this year while their shares
are all down. At the same time, he sold shares in companies
including miner Rio Tinto Plc, which is down 24 percent in 2011.
Biggest Stakes
Murray International Trust’s biggest stockholding as of
June 30 was British American Tobacco Plc, which has risen 10
percent this year, while the largest fixed-income investment was
in 6.5 percent dollar bonds sold by Rio Tinto maturing in 2018,
which currently trade at about $122 for every $100 of face
value, up from about $116 at the start of the year.
“You don’t want to be tempted to be reactionary; you can
make mistakes in these markets so you don’t want to be involved
emotionally,” Stout said. “Switch the screen off because it
doesn’t make sense, and then switch it back on when the dust has
settled and see if there are any big pricing anomalies.”
June 30 was British American Tobacco Plc, which has risen 10
percent this year, while the largest fixed-income investment was
in 6.5 percent dollar bonds sold by Rio Tinto maturing in 2018,
which currently trade at about $122 for every $100 of face
value, up from about $116 at the start of the year.
“You don’t want to be tempted to be reactionary; you can
make mistakes in these markets so you don’t want to be involved
emotionally,” Stout said. “Switch the screen off because it
doesn’t make sense, and then switch it back on when the dust has
settled and see if there are any big pricing anomalies.”
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