Seeking a high and rising income and capital growth: The Merchants Trust

 

 

 

The Merchants Trust PLC has, for many years, focused on a simple proposition: to deliver a high and rising income together with capital growth, through a policy of investing mainly in higher-yielding large UK companies. We measure our success in attaining this objective by comparing the performance of the portfolio against the performance of the FTSE All-Share Index

 

Active is: As focused on dividends as you are

 

Merchants was established in 1889. Today the Trust invests in a diversified portfolio of large, well-established and well-known UK companies. These companies are able to grow their sales over time or cut costs in order to preserve or improve their profit margins. This enables them, in general, to maintain and increase their dividends over time.

The UK stock market is a good environment in which to invest as many of the companies listed on the London Stock Exchange are truly international in nature, including some of the world’s largest and best known multinationals. This provides Merchants shareholders with exposure to global end markets whilst benefiting from the UK’s leading corporate governance standards.

 

Our History

 

 

The Merchants Trust celebrated its 130th anniversary in 2019, having successfully navigated a variety of market conditions – and several world conflicts – throughout its history.

Although the present day Merchants has a very different investment strategy to the one of 1889, the Trust was set up to deliver something very similar to what it does today: to invest in a diverse group of investments in order to provide investors with an opportunity to benefit from some of the growth industries of the era.

 

‘Income is our focus. We are income seekers and we make no apology for buying shares that provide the high yield we require. It’s why so many private investors hold the Trust.’

Simon Gergel, Portfolio Manager

 

Merchants’ objective was to deliver healthy dividends of perhaps 5 to 6% plus capital growth, by investing in North American railway expansion, as well as in other continents, countries and industries.

The Trust survived various panics in its early years, when it experienced all manner of market conditions but still managed to pay out to its founding investors healthy and gradually increasing dividends.

Few of the trust’s early investments still exist today, arguably a demonstration of the benefit of active management over time. The companies we invest in now don’t tend to have a 130 year history, so the real benefits of changing the portfolio gradually have become apparent over the very long term.

Portfolio Manager Simon Gergel says: ‘It is a great privilege to be the fund manager of The Merchants Trust as it turns 130 years old. This remarkable achievement provides perspective in a world obsessed with short-term market movements, political and economic risk.

‘One of the great features of investment companies is the ability of the board to set strategy and to adapt to a changing world. Merchants was formed originally to finance the North American railway boom, and other opportunities elsewhere around the world, but it has evolved over the years. Whilst Merchants now invests solely in UK companies, it is notable that many British companies are multinational businesses, with the majority of Merchants’ portfolio’s underlying sales and profits still coming from abroad. Generating a high income has always been part of Merchants’ DNA, long before DNA was discovered, and we are proud to have been able to raise the Trust’s ordinary dividend for the last 37 years.’

 

Why Invest?

 

Through Merchants, investors can access a concentrated portfolio of large UK companies that aims to provide a rising income as well as long term capital growth. Managed since 2006 by Chief Investment Officer of UK Equities, Simon Gergel, the Trust favours companies with strong cash flows and good fundamentals.

 

Active Is: Seeking Out the Best Opportunities

 

Merchants seeks out the best opportunities for dividend yield and long term capital growth from a concentrated portfolio of leading UK companies. Having conviction allows portfolio manager Simon Gergel to concentrate the portfolio into his team’s very best ideas.

 Simon looks for shares with a dividend yield, but also with strong cash flows and good fundamentals. He also looks to pay a reasonable price for the shares.
 

Dividend Growth

 

Although past performance is no guide to the future, Merchants has paid rising dividends to its shareholders for 37 consecutive years. It is one of the Association of Investment Companies’ Dividend Heroes – an elite list of investment trusts that have increased their dividends for 20 years or more.

So, Merchants could be an attractive proposition for investors planning for retirement, looking to increase their savings or simply wanting to supplement their income. Please remember, however, that a ranking, a rating or an award provides no indicator of future performance and is not constant over time.

Although past performance is no guide to the future, Merchants has paid rising dividends to its shareholders for 38 consecutive years.

It is one of the Association of Investment Companies’ Dividend Heroes – an elite list of investment trusts that have increased their dividends for 20 years or more.

So, Merchants could be an attractive proposition for investors planning for retirement, looking to increase their savings or simply wanting to supplement their income. Please remember, however, that a ranking, a rating or an award provides no indicator of future performance and is not constant over time.

 

 

Find out more about The Merchants Trust here >

 

To buy this trust login to your EQi account

 

Select The Merchants Trust PLC – GB0005800072

 

_{All sources Allianz Global Investors GmbH unless otherwise noted. This is no recommendation or solicitation to buy or sell any particular security. A security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date. Investing involves risk. The value of an investment and the income from it may fall as well as rise, investors may not get back the full amount invested. Past performance is not a reliable indicator of future results. The views and opinions expressed herein are subject to change without notice, are those of the issuer and/or its affiliated companies at the time of publication.}

_{This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, D 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY, www.allianzglobalinvestors.co.uk, authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the FCA’s website (www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available on request. The Merchants Trust PLC is incorporated in England and Wales. (Company registration no. 28276). Registered Office: 199 Bishopsgate, London, EC2M 3TY.}