Performance, Commentary & Portfolio
ISIN GB0005800072 | SEDOL 0580007
Fund Manager’s Review
After a temporary lull, the war in Iran escalated again towards the end of August as peace efforts failed. This weighed on global sentiment, with the oil price rising and bond yields also going up, as investors worried about inflationary pressures.
In a traditionally quiet summer month for equity markets, UK shares made modest progress, although medium sized companies outperformed the larger stocks. US and European shares also rallied, with technology shares outperforming in America.
Within the UK stock market, the best performing sectors included metals & mining, which benefitted from rising commodity prices, software and industrial services. The weakest sectors included tobacco, pharmaceuticals and banks.
Performance was ahead of the benchmark, with strong gains at copper miner Atalaya, building products supplier Grafton and Sage, the accounting software company. Relative performance was also helped by not owning AstraZeneca and HSBC, which underperformed and held back the benchmark return. The main detractors from performance were the banks Lloyds and OSB (OneSavingsBank), whilst not owning Glencore, Anglo American and Rolls Royce also constrained relative performance. Merchants’ Net Asset Value (NAV) total return was 1.37% compared to 0.69% from the benchmark, FTSE All-Share index.
We sold three stocks out of the portfolio in August. Tate & Lyle, the speciality ingredients company, received a takeover bid from an industry peer at a significant premium to its prevailing price, so we sold the position. We exited the final position in the small recruitment firm SThree, where the shares have been strong recently. Although SThree specialises in supplying people for Science, IT, engineering and technical industries, which remain attractive areas, the industry is going through substantial changes and recruitment markets remain soft. We sold out to focus on higher conviction investments.
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"Within the market, medium sized companies look particularly cheap, offering a rare discount to their larger peers and the portfolio has a large weighting to that part of the index." |
We also exited the position in the oil and gas company Energean. Whilst the company has attractive assets and long term contracts, particularly in the Eastern Mediterranean, the market and cashflow dynamics have deteriorated somewhat. We decided to concentrate the portfolio’s energy exposure in companies where we have higher conviction, such as Shell and Harbour Energy, which we have been adding to.
Proceeds of sales were invested in building up position in a broad range of companies where we see significant upside, such as OSB, Marshalls, Chesnara and Unite.
Looking forwards, although the UK stock market has performed well, it remains one of the cheaper equity markets in the world. This is despite the broad geographic exposure and the strong governance standards that UK listed companies offer. Within the market, medium sized companies look particularly cheap, offering a rare discount to their larger peers and the portfolio has a large weighting to that part of the index.
The high number of new investments and sales we made in recent months is indicative of the numerous attractive investment opportunities we have identified, in a market where we see large share price swings between and within different sectors. This has enabled us to concentrate exposure in shares where we have higher conviction, although this is a never-ending process. We are optimistic that the portfolio has the potential to deliver a growing dividend income stream and strong capital returns to meet Merchants’ objectives.
Simon Gergel
10 September 2026
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
Key Information |
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Launch Date |
16 February 1889 |
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AIC Sector |
UK Equity Income |
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Benchmark |
FTSE All-Share |
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Annual Management Charge |
0.35% |
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Performance Fee |
No |
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Ongoing Charges 1 |
0.54% |
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Year End |
31 January |
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Annual Financial Report |
Final published in April, Half-yearly published in September |
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AGM |
May |
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Dividend Pay Dates |
February/March, May, August, November |
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Dividend XD Dates |
January, April, July, October |
1. Source: AIC, as at the Trust’s Financial Year End (31.01.2026). Ongoing Charges (previously Total Expense Ratios) are published annually to show operational expenses, which include the annual management fee, incurred in the running of the company but excluding financing costs.
Registrations |
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Company No. |
00028276 |
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FATCA GIIN No. |
ZHLNUL.99999.SL.826 |
Codes |
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RIC |
MRCH.L |
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SEDOL |
0580007 |
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ISIN |
GB0005800072 |
Awards & Ratings
Boring Money Retail Investor Champion 2026: The Merchants Trust has been named a Retail Investor Champion, recognising its commitment to clear communication and engagement with retail investors.
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.
Association of Investment Companies Dividend Hero: The AIC dividend heroes are the Investment Trusts that have consistently increased their dividends for 20 or more years in a row.
Association of Investment Companies ISA Millionaire 2026: The AIC ISA Millionaire recognises Investment Trusts that would have made investors more than £1 million if they had invested the full annual ISA allowance in the same trust each year.
Citywire Investment Trusts Awards 2023: Winner UK Equity Income: The Citywire Investment Trust Awards recognise the strongest performers across major asset classes and sectors.
Citywire Investment Trusts Awards 2022: Winner UK Equity Income: The Citywire Investment Trust Awards recognise the strongest performers across major asset classes and sectors.
Investment Week - Investment Company of the Year Awards 2022: Highly Commended UK Income: The Investment Week Company of the Year Awards highlight managers who have delivered consistently strong performance for investors across a variety of sectors and the judges believe can continue to perform well in the future.
AIC Shareholder Communication Awards 2022: The AIC Shareholder Communication Awards recognise exceptional shareholder communication by AIC member Trusts and their managers.
Shares Awards 2021 - Best Investment Trust for Income: The Merchants Trust was recognised in 2021 by the readers of shares magazine. The award is voted for by readers and is not influenced by an industry panel, providing a validation of Merchants' investment strategy from individual investors in the trust.
Association of Investment Companies (AIC) Shareholder Communication Awards 2021: The Merchants Trust won the award for ‘Best Report and Accounts – Generalist’. The judges praised the winning entry for the quality of its case studies and investment report, its use of language that was easy to understand, and the level of detail provided on the portfolio.
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.
A ranking, a rating or an award provides no indicator of future performance and is not constant over time.