The Lemon Fool

I'm a long-term holder of Murray International. Should the merger of Aberdeen Asset Management and Standard Life raise any concerns?

On the one hand, as an investment trust, it has an independent board, on the other hand, I've heard Bruce Stout referring to being presented with ideas and analysis from the Aberdeen team and then making his selections.

The merger seems to be getting a bad press, mainly to do with the perceived self-interest of both boards, but is that relevant to having a long-term holding in Murray International?

I see no reason why the merger of Standard Life and Aberdeen Asset Management should raise cause for concern about Murray International IT. As you say Murray International has its own board and mandate and the board has responsibilities to investors.

Yes, I have seen the media coverage of the merger of SL and ADN., but that should have no bearing on the individual IT's within the groups, unless perhaps you had a view that there might be some rationalisation or merging of trusts.

I too am a long term holder of MYI (and SL).

I believe there are 19 ITs in the Aberdeen Stable and Standard Life run 5. I guess there might be some overlap of mandate, but this might take some time to rationalise. Should we expect that synergies from the merger will boost performance?

I hold a number of Aberdeen ITs, SL and SLS.

Bruce Stout is of course employed by Aberdeen, but I cannot see him taking too much from the Aberdeen team. He seems to me to be very much his own man. He will not of course be there for ever but all ITs have a Board which is more or less independent of the manager. They are of course supposed to be entirely independent and I think they are all much more so than they used to be. They are entitled to change managers if they want but there are some, for instance in the Baillie Gifford stable, where it would be difficult to see them with any other manager.

Anyhow it is quite likely that IT Boards like that of Murray International will issue a soothing statement as and when the merger takes effect to say something like 'Your Board has considered the effect of the merger on the management of your trust and has concluded that for the time being at least, there will be no change in the management style but you may be assured that the matter will be kept under close review'. That is the sort of statement that is normal and I think there is no needs to get too concerned at this stage.

Dod

Maybe an additional related point:- After the merger completes, IT's like MYI should arguably have access to the research resources of both Aberdeen AND Standard Life, should they chose to avail themselves of it.

(As said above, I don't doubt that Bruce will continue to be his own man).

stuart349734 wrote:The merger seems to be getting a bad press, mainly to do with the perceived self-interest of both boards, but is that relevant to having a long-term holding in Murray International?

Having worked in an investment company that owned unit trusts, I'd say no. Generally speaking the trust managers were independent and depending on their background might not even place much weight on their own company's research. Of course, if a manager were to leave following such a merger that might well be a signal of change ahead.

Re: The Chairman's statement quoted below on the matter and lifted from the most recent Annual Report & Accounts released 13 March

The Board notes the recent announcement of the proposed recommended merger between the Company's Manager, Aberdeen Asset Management PLC, and Standard Life plc. It is still early days in this transaction which is subject to shareholders' and regulatory approvals. The Board has sought and obtained assurances that the existing investment management and client servicing team from Aberdeen will remain in place and focused on the Company's affairs, and we will be vigilant to ensure this remains the case.

"and we will be vigilant to ensure this remains the case" - which I take to mean is a polite of saying don't mess about with Bruce Stout or else!

Forrado's quote Is pretty much what I said on 12 May. Am I a psychic? Not really, just what is normal and to be expected. (meaning nothing very much)

Dod

It never occurred to me that the merger might be a problem.

I am pleased with MYI's gently improving dividend. Indeed I probably ought to have put more in MYI than its stablemate Aberdeen Asian Income AAIF.

MYI underwent 2 years or so of underperformance during which time I built up my stake at a discount. Luck rather than foresight.

If you get the chance read Bruce Stout's commentry in the latest annual report.
Highly entertaining - this is a gentleman with..... opinions. He is not going to be messed around.

Matt