Portfolio & Performance

ISIN GB0005800072
SEDOL 0580007

Share Price is the price of a single ordinary share, as determined by the stock market. The share price above is the mid-market price at market close.
Share Price

Net Asset Value (NAV) per Share is calculated as available shareholders’ funds divided by the number of shares in issue, with shareholders’ funds taken to be the net value of all the company’s assets after deducting liabilities. The NAV figure above is based on the fair/market value of the company’s long-term debt and preference shares (known as debt at market value). This allows for the valuation of long-term debt and preference shares at fair value or current market price, rather than at final repayment value (known as debt at par).
NAV per Share

Premium/Discount. Since investment company shares are traded on a stock market, the share price that you get may be higher or lower than the NAV. The difference is known as a premium or discount.

Dividend Yield is calculated using the latest full year dividend divided by the current share price.
Dividend Yield

Data source DataStream and Allianz Global Investors as at 22.10.2019 based on market close mid price.

Awards & Ratings

RSMR Rating: The Merchants Trust has been awarded RSMR’s ‘R’ rating, widely recognised as a mark of quality for funds, ranges and investment trusts that receive this seal of approval. The RSMR research process results in a list of investment trusts which are the trusts that RSMR feel have a robust, repeatable process and the ability to deliver strong performance in the future.
The RSMR rating is designed for use by professional advisers and intermediaries as part of their advice process. This rating is not a recommendation to buy. If you need further information or are in doubt then you should consult a professional adviser.


The data shown is not constant over time and the allocation may change in the future. Totals may not sum to 100.0% due to rounding. All data source Allianz Global Investors unless otherwise stated.

Top 10 Holdings (%)

Royal Dutch Shell - B Shares
Imperial Brands
BAE Systems
HSBC Holdings
British American Tobacco
Standard Life Aberdeen
Legal & General
Scottish & Southern Energy

Data as of 30.09.2019

Geographic Breakdown (%)

UK 97.1
Cash 2.9

Data as of 30.09.2019

Sector Breakdown (%)

Consumer Goods
Consumer Services
Oil & Gas
Health Care
Basic Materials

Data as of 30.09.2019

Market Cap Breakdown (%)

FTSE 100 64.0
FTSE 250 25.2
Small Cap 7.9
Cash 2.9

Data as of 30.09.2019

Fund Manager Comments

September saw a continuation of political uncertainty. There was no sign of an end to the rumbling US / Chinese trade tensions. In the UK, the Brexit situation remained fluid. The Conservative government prorogued parliament for several weeks, but this was ruled unlawful by the High Court, forcing a hasty return to Westminster. The questions of whether and how the UK would leave the EU by the end of October remained open with just a month to go, despite Parliament passing a bill to force the prime minister to seek a Brexit extension if no deal is agreed by mid-October.

Most major stock markets produced positive returns in the month with the FTSE All-Share Index up around 3%, but with significant volatility within the market. There was a sharp rotation from the perceived high quality, high growth stocks, which had been leading the market in prior months, into more lowly valued shares including higher yielding shares, which had lagged behind. Among the larger sectors in the UK life insurance, food retail, financial services, banks and real estate performed well, whilst personal goods, beverages, media and tobacco produced negative or – at best – flat returns.

The Merchants Trust’s NAV gained 6.2%, well ahead of the benchmark return of 3%, reflecting in particular the portfolio bias to more lowly valued companies and sectors that outperformed. The biggest positive impacts came from Hammerson, where the shares rallied by 25% from a depressed level, and Standard Life Aberdeen, Tyman and IG Group, which all gave double digit returns. IG in particular responded well to a positive trading update. On the flipside, the biggest negative impacts came from Imperial Brands and Keller, which both had slightly disappointing trading updates, whilst Senior shares were also weak.

We added one new company to the portfolio. DFS is the UK’s leading sofa retailer with over 30% of the sofa market under their brands; DFS, Dwell, Sofa Workshop and the recently acquired Sofology. The company is the clear market leader with a long history of market share gains and it has significant scale advantages in manufacturing, sourcing and distribution. The shares were lowly rated due to general concerns about consumer confidence and online disruption threats. However, sofa retailing is relatively well protected against pure online retailers, as the product is made to order so manufacturing efficiencies are critical, people like to touch and feel the product, and logistics is complex and costly. Whilst the end market is cyclical and economically sensitive, we see potential for a medium term improvement from here as consumer confidence is already weak and could benefit from any resolution to the Brexit situation. Furthermore, housing transactions are running at a low level and sofa purchases are often related to house moves. The company also stands to gain from cost savings from the Sofology integration and from renegotiating property leases.

Apart from this transaction, there was less activity in the portfolio than in recent months. We took some money out of TP ICAP, CRH, Meggitt and Informa, which had performed well, and added to WPP where there are some signs that the business restructuring is starting to lead to improved operational performance.

We have previously written about the extreme polarisation in the stock market between those stocks perceived to be better quality and offering high growth, which are generally very highly rated, and more cyclical stocks and financial companies which are often very cheap. Whilst Merchants has benefitted from a sharp rotation of the stock market from the former to the latter category in September, the gap between the two areas remains unusually large. We continue to see excellent value in many of the companies in the portfolio and we have only modestly changed its composition. We believe that the portfolio companies have potential to deliver both a high income stream and a good total return in line with Merchants’ objectives.

Simon Gergel 15 October 2019

There was a sharp rotation from the perceived high quality, high growth stocks, which had been leading the market in prior months, into more lowly valued shares

This is no recommendation or solicitation to buy or sell any particular security.


Performance (%)

Select period:

    Cumulative Returns (%)

    3M 6M 1Y 3Y 5Y
    Share Price 1.8 3.2 2.2 34.5 32.5
    NAV (debt at fair value) 2.4 3.8 -1.1 22.9 34.0
    Benchmark 1.3 4.6 2.7 21.9 37.0

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 30.09.2019.1

    Discrete 12 Month Returns to (%)

    2019 2018 2017 2016 2015
    Share Price 2.2 9.8 19.9 7.4 -8.3
    NAV (debt at fair value) -1.1 6.8 16.4 12.9 -3.5
    Benchmark 2.7 5.9 12.1 18.4 -5.1

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return as at 30.09.2019.1

    1Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information. The value of an investment and the income from it can fall as well as rise as a result of market fluctuations and you may not get back the amount originally invested.This investment trust charges 65% of its annual management fee to the capital account and 35% to revenue. This could lead to a higher level of income but capital growth will be constrained as a result.

    Copyright 2019 © DataStream, a Thomson Reuters company. All rights reserved. DataStream shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

    © Allianz Global Investors GmbH 2019, Registered Office: Frankfurt am Main, Register: HRB 9340, Local court: Frankfurt am Main. All Rights Reserved. The Merchants Trust PLC is incorporated in England and Wales. (Company registration no. 28276). Registered Office: 199 Bishopsgate, London, EC2M 3TY. The Company is a member of the Association of Investment Companies - Category: UK Equity Income.