Murray International focuses on cash flow

"The next trick is to move the debt mountain. Quantitative easing has failed. Do you have debt forgivers, for example, writing off student loans? Young people will never get to be household owners because of debt. But debt forgiveness is another can of worms.

"This is a low growth, low interest, low yield environment that is not comparable to the 1960s. People haven't seen it before because the 1960s wasn't 'no growth'. This is a very harsh environment for companies to operate in. Expectations have to be adjusted down."

Murray International is a popular global income investment trust that has traded at a premium since 2008 and is a longstanding member of the IC Top 100 funds.

Mr Stout is also worried about the "theft of savings". "Central bankers have slashed interest rates to 0 per cent and the prudent saver has picked up the tab for that. Now savers are even being charged to hold their money in the bank - a pretty sad state of affairs.

"Until 2008 the average real interest rate was 2 per cent. Since 2008 it's been -2 per cent.

"Making people go from cash to bonds and equities in search of income is not on. They are completely different risks. The end game is that the income fund no longer gives any income as prices are forced up. The widespread fear and concern over savings is genuine."

But he says none of this has changed his investment philosophy, which focuses on capital preservation and income. "We just buy good quality companies and hold them for a long time," he says. "Diversification is our goal. Income and dividend growth is very important.

"We look at a company's balance sheet. Is the dividend covered by natural free cash flow? Lots of UK companies have dividends that are not covered, but if they were cut it wouldn't go down well with shareholders. We don't buy yield, we buy balance sheets that can deliver."

He has recently taken some profits on companies in the portfolio that have done well, including Johnson & Johnson (JNJ: NYQ) and Unilever Indonesia (UNVR:JKT) and added to Soquimich (SOQUICOM:SGO), a potash producer in Chile because "energy and minerals are out of favour". He has also topped up on Nordea (NDA SEK:STO), a leading Swedish banking group that has recently increased its dividend. "This company is boring and excellent," he says. "We think the more boring the better, and if it's boring and unloved, even better."

In 2014, Mr Stout reduced the trust's equity exposure, putting money into emerging markets debt. "Emerging markets have underperformed for five years now and a fall in oil prices is a big bonus for countries such as Indonesia," he says.

Mr Stout aims to hold different types of unique businesses in the portfolio. And he pays little attention to sector diversification. "Sectors are just labels," he says, giving the examples of two of his holdings to explain further.

"Taiwan Semiconductor (2330:TAI) is a technology company in that it makes chips, but it is also industrial and cyclical in that the end market is automotives.

"Casino Guichard Perrachon (CO:PAR) is not a casino but a retailer. It is domiciled in France, but is big in Thailand and Vietnam. Five years ago it was a French retailer, but now it is effectively an emerging markets retailer. It's probably our most misunderstood stock. But it has a clear strategy in the next five years of where it wants to go.

"We look at companies on a sector basis, but you have to take it with a pinch of salt. You've got to look at where companies got their profits from, not where they are domiciled."

MURRAY INTERNATIONAL (MYI) KEY FACTS

Source: Morningstar and *AIC as at 24 February 2015

Performance of Murray International vs FTSE World index %

Source: Morningstar, *to 31 January 2015.

Murray International's latest dividends

TOP TEN EQUITY HOLDINGS (as at 31 January 2015)

Geographic domicile of equity holdings (as at 31 January 2015)