Launched in 1889, The Merchants Trust (LSE: MRCH) has evolved throughout its history into an investment trust seeking a high and growing income from a portfolio of UK equities. It is managed by Simon Gergel, chief investment officer of UK equities at AllianzGI, and is both the largest and the oldest of the trusts managed by AllianzGI. MRCH is differentiated from peers in the UK Equity Income sector by using the FTSE 100 index as a performance benchmark; the trust currently has a slant towards some of the largest stocks in the index, although it also has c 35% of assets invested in companies outside the 100 largest. MRCH is one of the highest-yielding equity investment trusts and has a 34-year record of annual dividend growth.
In this video, portfolio manager Simon Gergel explains how the Brexit vote has favoured some of the largest UK companies, which derive the majority of their revenues from overseas, and how a weaker sterling has boosted the dividend-paying prospects of these companies. He also explores how the climate of uncertainty has favoured more defensive companies as well as the beneficiaries of a weaker pound, and looks at the opportunities emerging in recovery stocks, where valuations have reached favourable levels compared with their medium-term growth potential.