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 09.12.2019 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
BAE Systems
Imperial Brands
HSBC Holdings
Standard Life Aberdeen
British American Tobacco
Legal & General
St James's Place

Data as of 31.10.2019

Geographic Breakdown (%)

UK 97.4
Cash 2.6

Data as of 31.10.2019

Sector Breakdown (%)

Consumer Goods
Consumer Services
Oil & Gas
Health Care
Basic Materials

Data as of 31.10.2019

Market Cap Breakdown (%)

FTSE 100 64.5
FTSE 250 24.5
Small Cap 8.4
Cash 2.6

Data as of 31.10.2019

Fund Manager Comments

“Are we there yet?” How many times have parents heard their children say that in the back of the car on a long journey? In October, the UK population could be heard shouting this out, as Boris Johnson drove the UK car around the EU motorway, looking for the “Brexit”, whilst Jeremy Corbyn sat in the passenger seat holding the handbrake. Against some expectations, the Prime Minister came back with a revised Brexit deal and it became the first EU Withdrawal deal to be voted for by Parliament. However it was immediately suspended as the opposition parties wanted to add amendments that the Conservatives would not accept. At the end of the month, Parliament agreed to hold a general election on December 12th to try to break the Brexit impasse.

Generally, economic conditions in the UK and globally have slowed down in recent weeks due to trade issues and, in the UK, due to Brexit uncertainty. This prompted further central bank policy easing with the US Federal Reserve cutting interest rates at the end of October for the third time this year.

Financial markets reacted first to the reducing probability of a “no-deal” Brexit, as Parliament forced the Prime Minister to seek a Brexit extension, then to the actual passing of a Brexit deal in the House of Commons, making “no-deal” even less likely. The value of the pound rallied and UK gilt yields rose as investors sought out UK assets and perceived a lower risk of a hard landing to the economy. The stock market weakened initially in October, then rallied on improving sentiment. However, the Mid Cap FTSE 250 index, which is more domestically focused, outperformed the broad market ending the month slightly up in total return terms, whilst the FTSE All-share index ended modestly down.

The best performing sectors were mainly domestically focused, including fixed line telecommunications, software, real estate and life insurance, whilst the worst performers were more globally diversified, including healthcare equipment, tobacco, oil & gas producers and beverages.

The Trust’s NAV rose 2.3% against a fall in the benchmark of 1.4% as the portfolio outperformed the market, benefitting from a high exposure to domestic and financial stocks and a low exposure to multinational defensive businesses. There was a large spread between individual share price performances in the market and in Merchants’ portfolio. Several companies produced double digit positive total returns on improving investor sentiment, including GVC, Landsec and Barclays, which made the biggest contributions to the outperformance. There were also a few companies where share prices fell by double digits, with Tyman, Man Group and Stock Spirits all impacting returns.

There was no major change to the structure of the portfolio, but we took money out of shares that had performed well recently and therefore offered less compelling value, and reinvested into companies with more depressed valuations or newer ideas, where we are building up the position size. In particular we took some money out of the real estate companies Landsec and Hammerson, which had rallied by 30-40% since we added to the holdings only back in August. We also sold down more of the Greene King holding after the takeover bid and reduced SSE and GVC. We continued to build up the new holdings in Stock Spirits and DFS and added to Balfour Beatty, Antofagasta and Barclays amongst others. Also, Prudential split into two companies, so the portfolio now holds M&G, representing predominantly the UK businesses, whilst Prudential is now primarily an Asian and North American business.

Whilst geopolitical risks remain elevated with US–Sino trade talks ongoing and the UK facing an imminent general election and potential Brexit, the UK stock market remains attractively valued compared to global peers. Furthermore, listed UK companies earn a very high proportion of earnings overseas, where election and Brexit issues are much less relevant. But investment opportunities in the UK stock market are not evenly spread. As we have discussed before, there is a polarisation between highly rated “quality” and “growth” stocks and lowly rated “value” stocks. The latter tend to be in more cyclical, financial and domestically focused sectors. Whilst the disparity between these two groups has narrowed somewhat from extreme levels reached over the summer, the gap remains very wide. We continue to find many opportunities to buy fundamentally sound businesses trading on attractive valuations and offering above-average dividend yields. By owning a diversified portfolio of these companies, we believe that The Merchants Trust remains well placed to deliver a high and rising income and good total returns over the medium-term horizon.

Simon Gergel 31 October 2019

the UK stock market remains attractively valued compared to global peers

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 3.4 2.2 9.0 36.8 35.5
    NAV (debt at fair value) 0.7 -0.4 6.2 20.0 34.6
    Benchmark -2.1 0.4 6.8 19.0 36.4

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 31.10.2019.1

    Discrete 12 Month Returns to 31 October (%)

    2019 2018 2017 2016 2015
    Share Price 9.0 3.3 21.5 1.1 -2.0
    NAV (debt at fair value) 7.1 -2.1 15.5 9.3 2.6
    Benchmark 6.8 -1.5 13.1 13.7 0.8

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return as at 31.10.2019.1

    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.