Fund Focus: Murray International

By RICHARD DYSON
Updated: 05:13 EDT, 6 July 2009

Every week Financial Mail looks at a top performing fund and examines whether it is right for you. This week: Murray International.

Would you prefer to buy shares in a cautious bank lending only to people who can prove their ability to repay?

Or would you buy shares in a bank that willingly lends money to applicants who cannot prove their income?

These were questions that fund manager Bruce Stout, who runs the Murray International investment trust, asked his investors in 2006. He had two banks in mind.

The cautious one was Indian and is thriving. The reckless one was Scottish. Without taxpayers' help, it would be bust.

Stout uses this example to show that local and familiar companies, such as Royal Bank of Scotland, are not necessarily-sound.

UK investors are prejudiced against foreign firms, he says, and miss out on the growth they offer. Prejudice also makes us blind to risk on our doorstep.

Countries such as India and China are suffering a cyclical downturn from which they will swiftly recover, he says, but the UK and US are in a 'structural' crisis brought on by years of excessive borrowing that will take decades to correct.

Stout was concerned about the UK's and US's consumer frenzy and pulled the £563m Murray fund entirely out of Western banking and property interests by 2006 and cut exposure to equities in favour of cash and bonds.

But during the 'revulsion' period that gripped world markets last year, when shares were indiscriminately sold, he went on a spree, buying bonds and shares in solid companies and increasing exposure in emerging economies where shares had fallen but where prospects remained solid.

Murray's strong performance and its commitment to healthy dividends means its shares are in demand.