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“Investors are increasingly calling for real returns on their income from savings and investments. The Merchants Trust is an example of a long-established investment that has fulfilled its principal objective of delivering a regular quarterly payment which has grown over time.”

Simon Gergel
Portfolio Manager


The Trust’s objective is to provide an above average level of income, income growth and long-term growth of capital through a policy of investing mainly in higher yielding UK FTSE 100 companies.

Trust History

The Trust was incorporated in February 1889 and celebrated its 125th anniversary on 16th February 2014, making it the oldest of the investment trusts in the AllianzGI stable. Initially it invested in the fixed interest securities of railway companies in the USA, Canada and South America, with the remainder held in Government securities and companies such as Castlemaine Brewery in Australia. The Trust now concentrates primarily on major UK companies with an above average rate of dividend yield. On 30th June 2006 a further 1,655,941 Ordinary shares were issued following the reconstruction and planned winding up of Allianz Dresdner Income Growth Investment Trust plc. The increase in assets was achieved at no cost to existing shareholders.

Investment Rationale

The Merchants Trust has a strong track record of investing in UK companies on behalf of its shareholders. For many years it has focused on a simple proposition, to deliver a high and rising income stream, together with long-term capital growth by investing in UK companies. By investing in companies listed on the London Stock Exchange, investors gain exposure to business activities across the globe whilst benefitting from the UK’s leading corporate governance standards. Portfolio manager, Simon Gergel uses extensive research resources to identify investment opportunities so every stock the Trust invests in undergoes rigorous analysis.

Investment Policy
The company’s policy is to remain substantially fully invested. The company has the facility to gear – borrow money – with the objective of enhancing future returns. Historically, the gearing has been in the form of long term, fixed-rate debentures. The board monitors the level of gearing and makes decisions on the appropriate action based on the advice of the manager and the future prospects of the company’s portfolio.
The company’s authorised borrowing powers set out in the Articles state that the company’s borrowings may not exceed its called up share capital and reserves. The board’s policy is to maintain gearing (borrowings as a percentage of net assets) in the range of 10-25% (at the time of drawdown).
Risk Diversification
The Company will aim to achieve a spread of investments, with no single investment representing more than 15% of assets. The Company will seek to diversify its portfolio into at least five market sectors, with no one sector comprising more than 35% of the portfolio.

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"The companies listed on the London Stock Exchange provide investors with a means to gain exposure to business across the globe whilst benefiting from the UK's leading corporate governance."

Simon Gergel
Fund Manager

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