Murray International has made more money than any other trust in the Global Growth sector over five and 10 years, more than doubling the returns of its benchmark over the shorter period.However, over one year the trust has performed only marginally better than its peers, which Stout says is due to his sceptical attitude to the rising equity market.
"Anything that’s low in quality tends to go back down the way it came from," he said. "And this has been a low-quality rally."
"What was the best-performing stock on the market last year? Lloyds. Lloyds is a low-quality investment because you can’t analyse it properly."
"P/Es expanded in 2011 on the expectation that earnings would continue up this year. But a lot of people will be very disappointed because earnings will not increase, because the quality is not there."
"This type of market is so sentiment-driven because fundamentals are so bad that they can’t drive markets."
Data from FE Analytics shows that Murray International has returned 91.34 per cent over five years, compared with just 41.12 per cent from its custom benchmark – a mix of the FTSE World and FTSE All Share indices.
Performance of fund vs sector and benchmark over 5yrs
Source: FE Analytics
Its strong performance has led to it trading on a premium for more than a year, with the current figure at 6.1 per cent, according to the AIC.
Over one year it has made 20.22 per cent while its benchmark is up 14.44 per cent and the IT Global Growth & Income sector is up 18.72 per cent.
The trust is unconstrained by geography, but has a strong bias towards emerging markets.
Stout believes that the quantitative easing used by western governments is "economic vandalism" that will ultimately prove to be a disaster when the inevitable inflation ensues.
"It’s the arrogance of the establishment that dismisses history and believes that the Weimar Republic cannot happen in the UK, and the UK can never go down the route of Zimbabwe," he said.
"Most economic business is done between agents who have never met, so it’s based on trust. If you debase the currency then you destroy the confidence in the tokens you use, and then what do you have left?"
"We have got away with it over the last two to three years. They have used it to recapitalise the banking system. That’s why M4 [a measure of money in the economy] is negative: money in circulation is actually shrinking."
"It’s gone into the banks and not come out, so up to now it’s not appeared in the inflation indices."
Stout is particularly scathing about the latest leaked proposal from the Bank of England for negative interest rates.
"Have you ever heard of anything so stupid?" he said. "Can you believe that anyone who had studied economics could come up with something like that?"
Stout is much more positive on emerging markets, particularly those that have retained relatively low debt-to-GDP ratios.
"If you are looking from the perspective of the UK then it’s a mature ex-growth economy."
"However, a lot of other countries are just beginning on the consumption cycle where we were in the 1950s and 1960s."
Many investors focus on Asia for their emerging markets exposure, but Murray International has a high weighting to Latin America, making up 21 per cent of the portfolio.
The Brazilian stock market has been the fastest-growing index of the last 10 years, although Stout says he is finding plenty of opportunities in Mexico, which gets even less attention.
Performance of indices over 10yrs
Source: FE Analytics
He even holds Venezuelan government bonds in the 6.2 per cent of the fund that is allocated to fixed income investments.
Stout says the region is unfairly overlooked or too quickly dismissed by many investors.
"People are ignorant and prejudiced about the region," he said. "They associate it with coups, military governments and that sort of thing, but that was all in the 70s and 80s – although the Argentinian default in 2000 doesn’t help."
"You have to look for good levels of governance on the corporate level and how they have managed to deal with the changing politics."
He points out that the Mexican market actually outperformed its Brazilian counterpart last year, good news for top-10 holdings such as airport company ASUR and Kleenex-producer Kimberly-Clark de Mexico.
Performance of indices over 1yr
Source: FE Analytics
"Brazil was down in negative terms last year but it has been the best-performing market in seven out of the last 11 years," he said.
"The main issue in 2012 was the pressure on cyclicals, which will always negatively affect Brazil because of the stock market and political influence in sectors like telecoms and energy."
"We took it as an opportunity to add to our holdings in [mining corporation] Vale at an attractive valuation."
Stout says investors should take more of an interest in Mexico.
"Growth has been trending at 3.5 or 4 per cent for many years now, with a good savings rate and strong companies like ASUR and KCM. Relative labour costs are cheaper in Mexico now than in China."
"We have always heard different excuses for not investing in Mexico. We have heard that it is too close to the US, but it has done a terrific job of moving away from dependence on the US."
"It now has relative political stability – in fact the real political instability is in countries like Italy and Japan. And it has debt-to-GDP levels the West would die for."
The trust has a performance fee and the total expense ratio was calculated last year as 1.16 per cent.