Murray Income Trust has replaced its investment manager after a prolonged period of underperformance, with the board appointing the team behind the top-performing Artemis Income Fund to revive the trust’s fortunes.
Years of lagging returns
The decision followed a strategic review launched by the trust’s board in July 2025, which considered proposals from the incumbent manager, other investment managers and peer investment companies. Over the five years to 19 November 2025, Murray Income delivered a total return of just 26.9%, placing it firmly at the bottom of the UK equity income investment trust sector. Over the same period the FTSE All-Share index returned 70.9%.
The board concluded that a new direction was needed and in December 2025 announced it would drop Aberdeen as its investment manager. The change was completed on 2 March 2026, when Artemis officially took over the portfolio. Murray Income becomes the second trust mandate Artemis has won; it also took over the Invesco Perpetual UK Smaller Companies Investment Trust – renamed Artemis UK Future Leaders – in 2025.
From yield to free cash flow
The core difference between the new Artemis approach and the former Aberdeen strategy is a focus on cash flow rather than yield alone. The Artemis team — Adrian Frost, Nick Shenton and Andy Marsh — uses free cash flow to assess how much cash a company generates and whether its dividend is sustainable. They concentrate on companies they believe have the best potential for free cash-flow generation, overall shareholder yield (including share buybacks) and long-term growth.
The managers swiftly restructured the trust’s holdings to mirror the Artemis Income Fund’s portfolio. By 31 March 2026, 98.7% of the intended changes had been completed, representing approximately 75% of the portfolio by value. The top five holdings at the end of 2025 under Aberdeen were AstraZeneca, National Grid, Unilever, RELX and TotalEnergies, accounting for 21.6% of the portfolio. These have been replaced by Tesco, GSK, Lloyds Bank, NatWest and Aviva, which now make up 23.6% of the total.
The sector allocation has shifted markedly. Under Aberdeen’s management, financials accounted for 17.0% of the trust’s assets as of 28 February 2026. Under Artemis, as of 31 March, financials represent 33.7% of the portfolio, with consumer discretionary at 20.8% and consumer staples at 14.4%.
The impact of the new strategy is visible in the portfolio’s valuation. According to Morningstar’s data, the new portfolio is trading at a free cash flow yield approximately 50% higher than the old portfolio. The top five holdings in the Artemis portfolio also yield around 1.7 percentage points more on average compared with the previous holdings. All in all, the new holdings are cheaper, generate more cash and offer a better overall shareholder yield.
The trust has maintained its 52-year record of dividend growth, which has earned it “Dividend Hero” status from the Association of Investment Companies (AIC). The new managers are committed to continuing this record. To ease the transition, Artemis has waived its annual management fee for the first nine months from 2 March 2026. The ongoing annual charge as at 31 March was 0.48%, unchanged from under Aberdeen.
The Artemis team is also deploying leverage to enhance returns, capitalising on a structural advantage of investment trusts over open-ended funds. Murray Income has a leverage target of 8%–10%, and borrowings stood at 7.0% by the end of March, up from net gearing of 11.1% at the end of June 2025 under Aberdeen.
Outlook and positioning
The Artemis Income Fund, managed by the same three fund managers, has a strong track record. Over the past ten years it has outperformed the UK equity income fund sector by approximately 1.70 percentage points per year, and has consistently been in the top quartile of its sector over one, three, five and ten years. The fund has grown to around £5.3 billion in assets; Artemis as a whole reported approximately £41 billion in assets under management at the end of the first quarter, up from £28.5 billion at the end of 2024.
Investors considering whether to back the trust or the open-ended fund may note recent research from the AIC, which found that a solid majority (77%) of investment trusts have outperformed open-ended funds run by the same manager over ten years, with average excess returns of 1.3 percentage points per year. Murray Income now trades at a 7% discount to net asset value (NAV) and yields 4.3%, compared with its open-ended peer’s 3.5% yield. As of 31 March the discount stood at 8.6%, narrowing to 6.96% by 13 May 2026. The trust had net assets of approximately £911 million as of 31 March.
The transition has been completed against a backdrop of considerable market volatility arising from the Middle East conflict, a factor the new managers must navigate. While Adrian Frost is noted as being in the later stages of his career, succession planning with Andy Marsh and Nick Shenton is considered to mitigate key-person risk. The trust’s board has made clear that the appointment of Artemis marks a fresh start after years of underperformance, and the early portfolio metrics suggest a clear departure from the previous approach.
