The Merchants Trust’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 large-cap UK companies. With effect from 1 February 2017, the benchmark is a broad UK stock market index (previously an index of the 100 largest UK companies).
The Merchants Trust (MRCH) is managed by Simon Gergel at Allianz Global Investors. He suggests the company is ‘in a much better place’ compared with early 2020. The manager now has more confidence in the trust’s income prospects as dividends are resuming and in some cases being raised, and he has been able to take advantage of stock market volatility to reposition the portfolio. Gergel believes MRCH’s shareholders appreciate how the trust’s investment process remains consistent despite periods of market volatility, while the board’s progressive dividend policy provides an attractive income stream in excess of the UK market. This is reflected in MRCH’s relative performance, which has improved considerably in recent months. The trust currently offers a 5.5% dividend yield, the second highest of the 17 larger-cap peers in the AIC UK Equity Income sector.