Mercantile is a large and liquid UK mid-cap focused investment trust, with net assets of just under £2bn. It buys companies with strong earnings outlooks and operating in favourable industry or economic environments, with a strong bias to growth rather than value. It has a track record of outperforming strongly in rising markets, although has suffered when markets reverse.
After the Brexit referendum, the trust has been steadily tilting away from companies exposed to the UK consumer after the Brexit referendum and towards those plugged into global supply chains.
The trust aims chiefly for capital growth, but also to grow the dividend in excess of inflation, which it has comfortably done over ten years. The yield is 2.5%.
It has been managed by Martin Hudson since 1994, and he was joined by Anthony Lynch in 2009 and Guy Anderson in 2012. In February, the manager agreed to cut the OCF from 0.475% to 0.45%, which figure makes it the cheapest UK All Companies trust without a performance fee.
The discount of 9% is protected by a highly active buyback policy. The trust has tended to trade on a similar discount to the sector, although in recent months the trust has slipped out slightly despite performance being strong in absolute terms and relative to peers and sector. This has happened while the discount on the average smaller companies trust has also been narrowing and is now tighter than the trust’s.
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Fund History: Mercantile Investment Trust
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