Mercantile (MRC)

The Mercantile Investment Trust (MRC) aims to provide exposure to the UK’s future market leaders through a Portfolio focused on small- and mid-cap (SMID) companies. Managers Guy Anderson and Anthony Lynch employ a bottom-up, fundamentals-driven approach, targeting attractively valued, high-quality businesses with a promising outlook. This approach has delivered strong long-term returns, with MRC comfortably outperforming its benchmark – the FTSE All-Share ex-100 ex-Investment Trusts Index – over the past decade. Performance, however, has been more closely aligned with the benchmark over more recent periods, including the past five and one-year periods.

During 2025, Guy and Anthony reduced exposure to consumer-facing businesses in response to weakening consumer demand, while increasing allocations to areas offering a more favourable outlook, most notably the financials sector. For example, they initiated a new position in Quilter, a wealth management company benefitting from strong inflows and gaining market share. The managers have also established new positions outside the financials sector, including convenience food manufacturer Greencore, which is experiencing positive operational momentum and is in the process of acquiring Bakkavor, another food manufacturer. This transaction should enhance Greencore’s product range and deliver greater scale.

At the end of December, MRC’s Gearing stood at 13.8%, a relatively high level that the managers see as a reflection of their confidence in their portfolio companies’ prospects. In addition, the trust has increased its interim Dividends for the current financial year and is on track to deliver a 13th consecutive year of dividend growth. MRC also benefits from substantial revenue reserves, which provide support for dividend payments should income from underlying holdings be insufficient.