Mercantile (MRC)

The Mercantile Investment Trust (MRC) aims to own the future leaders of the UK equity market. Managers Guy Anderson and Anthony Lynch predominantly invest in mid-cap stocks, alongside selected small-cap companies, with the flexibility to retain exposure to holdings promoted to the FTSE 100 if they still have room to grow. Guy and Anthony employ a bottom-up, fundamentals-driven approach, focusing on companies offering high-quality characteristics, promising growth prospects, and attractive valuations. Overall, the Portfolio is relatively diversified, holding around 75 companies at any one time. This approach has enabled the trust to build an impressive Performance track record. For instance, since Guy’s appointment in 2012, MRC has delivered higher returns than both the FTSE All-Share ex-100 ex-Investment Trusts Index, the trust’s benchmark, and the FTSE 100.

In the past 12 months, Guy and Anthony have increased the portfolio’s allocation to the financials sector, seeing a favourable outlook for many companies within it. They have also added to their exposure to the technology and industrials sectors, expecting many companies in these sectors to benefit from rapid technology adoption and developments in artificial intelligence. Conversely, they have reduced their exposure to the consumer discretionary sector, notably due to a stalling recovery in UK consumer confidence.

Gearing currently stands at 17%, reflecting Guy and Anthony’s continued confidence in their portfolio, suggesting that the companies held are demonstrating robust operational performance and are valued attractively. MRC has also paid its first interim Dividend for FY 2027, amounting to 1.6p and representing a year-on-year increase of c. 3.2%. This equates to a historic yield of c. 2.9%, which compares favourably with the c. 2.5% simple average of the AIC UK All Companies sector.