Portfolio & Performance


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 24.02.2020 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
British American Tobacco
Legal & General
Land Securities
St James's Place
Scottish & Southern Energy

Data as of 31.01.2020

Geographic Breakdown (%)

UK 99.5
Cash 0.5

Data as of 31.01.2020

Sector Breakdown (%)

Consumer Goods
Consumer Services
Oil & Gas
Health Care
Basic Materials

Data as of 31.01.2020

Market Cap Breakdown (%)

FTSE 100 64.4
FTSE 250 25.0
Small Cap 10.1
Cash 0.5

Data as of 31.01.2020

Fund Manager Comments

Investor sentiment was positive in early January, as the US and China moved towards a limited trade agreement in the middle of the month. Survey data and comments from companies suggested improving trading conditions in certain domestic industries, such as housebuilding and commercial property, in the wake of the Conservative general election victory in December. However, the positive investor sentiment was short lived as the outbreak of the coronavirus spread rapidly in China. By the end of January it had claimed over 200 lives and led to the lock-down of several large cities affecting tens of millions of people. Apart from the tragic human cost, markets reacted to the possible economic cost in terms of slower growth and restricted travel and trade.

The UK stock market fell in the second half of the month with a drop of over 3% for January. Bond yields also declined as economic growth expectations came down. The best performing sectors were generally defensive sectors, such as tobacco and utilities, although housebuilders were also strong. The biggest falls were mostly seen in cyclical industries such as oil and mining, as commodity prices fell, with banks, retail and travel & leisure also weak.

The Trust’s NAV fell by 1.8% in January, but ended the month ahead of the benchmark which fell 3.3% as the portfolio outperformed the falling market. The biggest contribution to this outperformance came from BAE Systems as the stock market reacted enthusiastically to two acquisitions it made of high technology defence businesses in the USA. Pennon shares also rallied as press articles suggested it had been offered a high price for its Viridor waste and recycling business and Keller continued its recent share price recovery. There were fewer negative contributors, but shopping centre owner Hammerson’s shares fell back as its peer Intu continued to have financial troubles, and many retailers reported poor Christmas sales. WPP shares were also weak, but on little news. Not owning Unilever also held back relative performance as the shares outperformed in a more defensive market environment.

We added the UK’s 5th largest housebuilder, Redrow, to the portfolio, increasing the portfolio’s exposure to this sector. Redrow builds over 6,000 homes in England and Wales each year and has a strong record of growth and the shares were trading at a modest valuation. Although Redrow’s shares and the housebuilding sector generally have performed well in recent weeks, and especially since the election, we see prospects for the industry remaining good. There is a structurally constrained supply of housing in the UK but plenty of new land available due to changes in the planning system. Consumer demand is strong and seems to be improving. The government remains committed to supporting the sector and we would expect a new scheme to replace the current Help-to-Buy scheme for first time buyers once the current scheme ends. We partly funded the investment by reducing the shareholding in Vistry (formerly Bovis Homes) to diversify the sector exposure. Vistry shares have performed exceptionally well especially since its fundraising in November which we supported.

We sold the investment in industrial property company Hansteen in January as the shares were fully valued after the company received a takeover bid last year. Elsewhere, we took some profits in strong performers like Pennon and Meggitt to fund additions in more attractively priced businesses like WPP, Royal Bank of Scotland and SSE.

The Merchants Trust financial year ended at the end of January. The stock market and the portfolio have performed well over the last 12 months and the UK stock market is now close to its long-term average valuation. However, UK shares remain cheaper than most other markets and there is still a sharp polarisation of valuations across different sectors. We continue to find many strong businesses offering above average dividend yields that we can buy on attractive valuations. Our portfolio is differentiated from the overall stock market and we believe that it can continue to offer the combination of a high and rising dividend together with long term capital growth in line with Merchants’ objectives.

Simon Gergel01 February 2020

UK shares remain cheaper than most other markets and there is still a sharp polarisation of valuations

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


Performance (%)

Select period:

    Cumulative Returns (%)

    Share Price9.713.419.237.443.2
    NAV (debt at fair value)10.611.419.729.441.3

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 31.01.2020.1

    Discrete 12 Month Returns to 31 January (%)

    2020 2019 2018 2017 2016
    Share Price19.21.613.515.6-9.8
    NAV (debt at fair value)19.7-5.914.915.6-5.6

    Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return as at 31.01.2020.1

    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 2020 © 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 2020, 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.