MRCH’s investment objective is to provide an above-average level of income and income growth, together with long-term growth of capital through investing mainly in higher-yielding UK FTSE 100 companies. The benchmark index is the FTSE 100 index.
The Merchants Trust (MRCH) is managed by Simon Gergel at Allianz Global Investors (AllianzGI). He highlights the trust’s growing income stream, long-term capital growth and above-average dividend yield. The manager notes that in FY19, MRCH’s dividend growth of 4.8% was meaningfully higher than the rate of UK inflation, and a step up in dividend growth following the debt refinancing in January 2018. He explains that revenue growth in FY19 was even stronger, allowing an addition to reserves, which can be used to smooth dividend payments in years when revenue growth is lower. Gergel says that MRCH’s portfolio continues to generate a healthy level of income, with most investee companies increasing their dividends, including Legal & General, St James’s Place and the tobacco companies.