An update from our investment manager, Bruce Stout - 17 May 2020
It feels somewhat surreal reflecting on the global economic backdrop that is evolving at the moment.
With the escalating coronavirus pandemic essentially paralysing economic activity throughout the
world, the depth and duration of the emerging global recession remains unfathomable and unquantifiable at present. The magnitude of draconian constraints currently being exerted on production, manufacturing, travel, consumption and the services will undoubtedly result in an economic contraction unprecedented relative to any historical norms. We must prepare ourselves for some very tough times ahead.
Whilst panic and fear dictated the volatile direction of financial markets throughout most of March, a degree of calm has since descended. Immediate liquidity concerns have eased in response to pledges of enormous monetary and fiscal support from Governments worldwide. As evidence of escalating economic hardship now emerges, the focus of attention within financial markets is likely to switch to corporate profits, balance sheets and dividends.
Murray International maintains a very diversified portfolio of global equities and bonds. In addition to emphasising companies with strong balance sheets and proven management teams, those possessing deep financial resources and robust historical dividend track records are deemed of great significance under current conditions. Having exposure to numerous such businesses has always been fundamental to the Trusts investment process.
Against the daily changing backdrop of clinical, political and economic events, providing a credible near-term outlook is both futile and irresponsible. Current conditions demand constant daily scrutiny of the business fundamentals of underlying holdings and the implications of virus related impacts, yet also remaining alert that at some point some semblance of normality will undoubtedly return. During times of severe market dislocations it is always very important to remain calm, objective and humble, but with the longer term outlook in mind, also vigilant and pro-active to attractive investment opportunities that are presented by such extraordinary volatility and prevailing fearful behaviours. Such focus will continue to be rigorously adhered to.
