Murray International, the 100-year-old investment trust which warned a year ago that global equities were heading for trouble, has reaped the reward of its caution by outpacing its benchmark and hiking the dividend by 10.5%.

The £650m trust, once a stalwart of Glasgow and now managed by Aberdeen Asset Management in Edinburgh, produced a net asset value total return of 14.9% for 2007 against the benchmark's 8.7% for its predominantly private shareholders.

Chairman John Trott commented: "The economic factors affecting the decisions of our manager in 2007 were very different from those existing in 1907 when the trust was founded. Economies and stock markets are now affected by global events but in 2007 we saw evidence of the downside of globalisation as the problem of sub- prime loans in the US affected banks throughout the world."

He went on: "A prolonged period of very low interest rates and lax lending by banks over the last few years has led to a significant increase in indebtedness in both public and private sectors in the UK and US.

"Tough times are ahead for these indebted nations and it is clear that the balance of economic power is shifting to developing nations, such as China, India and Brazil and those fortunate enough to possess the resources of energy and raw materials which the rest of the world needs."

Petrobras, the Brazilian energy corporation, is the biggest investment in the trust's portfolio, which is aimed primarily at producing income and which includes only five UK companies - Resolution Life, BAT, Vodafone, Weir Group and Centrica - in its top 20 stocks. It remains cautious on the UK and US but "sanguine on Asia and Latin America", Trott said.

Bruce Stout, the manager, commented: "One of the strategies of the fund in the last 18 months to the year end was to de-gear the portfolio out of equities, because equity markets had had a good run over the last few years." By the year end it was 20% in bonds and cash.

"Since the beginning of the year that has given us the firepower to reinvest in some high-quality companies that we currently own and which had been caught up in the fall-out good financial companies that were significantly taken down with the market."

He added: "We believe we will have to endure a period of below trend growth and maybe recession in both the UK and US, until some of the credit outstanding is repaid and some of the imbalances addressed - but there is still plenty of interesting growth opportunity elsewhere in the world."