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 21.01.2019 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.
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
HSBC Holdings
BHP Group
Imperial Brands
Legal & General
BAE Systems
Standard Life Aberdeen
Tate & Lyle

Data as of 30.11.2018

Geographic Breakdown (%)

UK 97.5
Cash 2.5

Data as of 30.11.2018

Sector Breakdown (%)

Consumer Services
Oil & Gas
Consumer Goods
Health Care
Basic Materials

Data as of 30.11.2018

Market Cap Breakdown (%)

FTSE 100 64.7
FTSE 250 26.8
Fledgling 0.9
Small Cap 5.1
Cash 2.5

Data as of 30.11.2018

Fund Manager Comments

November finally saw UK Prime Minister Theresa May unveil the UK’s Brexit withdrawal agreement, which was subsequently agreed by the EU, although there remained considerable uncertainty over whether it could be passed in the UK parliament. Elsewhere, US-China trade tensions continued to concern global investors. The risk of tariffs impacting the US economy was partly to blame for US government bond yields declining over the month (and bond prices rising). The theme of weakening economic growth expectations was further supported by the Chairman of the US Federal Reserve, who hinted that interest rates may not need to rise that much further.

Concern about slowing growth, and uncertainty over Brexit, weighed on the UK stock market, which recorded a modest decline in November, but with considerable volatility at the individual stock level. The worst performing sector was tobacco, on concerns about tighter regulation in the US tobacco market and a possible ban on menthol cigarettes. Otherwise, the weakest sectors were typically industrial and commodity sectors, which are sensitive to global growth expectations. The best performing sectors were generally defensive sectors, such as telecommunications, beverages and pharmaceuticals, with mobile telecommunications leading the pack, as Vodafone’s interim results and a maintained dividend reassured investors.

The Trust’s NAV fell by -3.7% over the month, lagging the benchmark return of -1.64%. Stocks that were not in the portfolio had a big impact on relative performance, both on the positive and negative side. On the negative side, not owning Vodafone and Diageo held back performance, as both of these performed well and helped the overall index return. Also, the gaming stock GVC Holdings was weak, as the government brought forward curbs on betting machines. On the positive side, not owning British American Tobacco helped the relative return, as the shares fell by almost 20% over the month. Elsewhere, Greene King rallied on reassuring results and GlaxoSmithKline outperformed due to its defensive qualities.

There were no major changes to the portfolio structure in the last month, but we took advantage of considerable stock volatility to make changes to a number of positions. We reduced holdings in companies that had significantly outperformed the market, where the upside potential had declined, to fund further investments in shares that had underperformed, and offered excellent value. In particular we reduced GlaxoSmithKline, Tate & Lyle and Marks & Spencer, to fund investments into BAE Systems, Imperial Brands, GVC and BP amongst others. Elsewhere, we also reduced exposure to FirstGroup, where the anticipated recovery in the business is taking longer than we had expected.

As we write this report, stock markets are going through a period of volatility, prompted by uncertainty over the outlook for global economic growth, US-China trade tensions and Brexit. However, recent declines in share prices mean that there is excellent long term value now available in many UK listed companies, particularly as the bulk of sales and profits of quoted stocks comes from outside the UK. One interesting statistic, according to Morgan Stanley, is that around a third of UK medium and large companies now have a dividend yield of 5% or above, which we have not seen since the financial crisis. We remain focused on identifying strong businesses with sound prospects, that we can buy on attractive valuations, in order to deliver Merchants’ objectives of an above-average dividend yield and long term capital growth. Today’s uncertainty is providing many such opportunities, and we are excited about the potential future returns of the portfolio holdings.

Simon Gergel 10 December 2018

recent declines in share prices mean that there is excellent long term value now available in many UK listed companies, particularly as the bulk of sales and profits of quoted stocks comes from outside the UK.

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 -5.3 -10.0 2.6 24.1 20.4
    NAV -9.8 -12.8 -2.8 17.9 18.9
    Benchmark -6.1 -7.7 -1.5 24.2 27.6

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 30.11.2018.1

    Discrete 12 Month Returns (%)

    2018 2017 2016 2015 2014
    Share Price 2.6 14.5 5.7 -5.5 2.6
    NAV -2.8 12.1 8.3 -1.1 1.9
    Benchmark -1.5 13.5 11.1 -1.9 4.7

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 30.11.2018.1

    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 2018 © 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.