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16 Apr 2024

The Mercantile Investment Trust

Company Notes

Historically High Gearing Reflects Manager Optimism

Background: The Mercantile Investment Trust* (MRC) aims to deliver long-term capital growth from investment in a diversified portfolio of UK medium and smaller companies. It also aims to grow its dividend growth at least in line with inflation. The fund has managed by Guy Anderson and Anthony Lynch of JPMorgan Asset Management since 2012.

Portfolio: The portfolio contains c.70 stocks. Key active sector weights include an overweight allocation to Technology (+5%), which was increased last year, and an underweight exposure to Real Estate (-10%), albeit positions have been added in this sector recently on valuation grounds.

Performance: Over the last ten years, MRC has delivered a NAV total return of +94% (+6.9% p.a.), outperforming the +57% (+4.6% p.a.) return of its benchmark. In addition, it has outperformed its closest peer, Schroder UK Mid Cap (SCP) (+67%, +5.2% p.a.), over this period. Following a challenging period for returns in 2022, absolute and relative returns have improved over the last 18 months, but the discount remains at 12%.

*Denotes a corporate broking client of Winterflood Securities