Performance, Commentary & Portfolio
ISIN GB0005800072 | SEDOL 0580007
Fund Manager’s Review
Andy Burnham became the UK’s seventh Prime Minister in just over a decade on 20th July, following Sir Keir Starmer’s resignation. He announced modest public spending increases, but committed to following Labour’s manifesto, meeting the fiscal rules and not raising income tax, national insurance or VAT. June’s tentative ceasefire in Iran was broken, but the situation was very fluid, with some stability later in the month. The Brent oil price spiked up from $73 to $100, before easing back toward $90.
Neither of these factors drove the equity markets, which were more focused on the huge spending on AI infrastructure and semiconductors, by the large “hyperscalers” (a large company that provides cloud computing and data storage services on a massive, global scale) like Amazon, Alphabet and Microsoft. After a boom in the first six months of the year, semiconductor shares fell heavily, bringing down tech heavy markets like the US Nasdaq Composite, and the Korean stock market. The broader US equity market was flat and European shares rose modestly.
By contrast, the UK stock market, which has limited exposure to technology, was a bit of a safe haven and rose by 3.7%, with medium sized companies up over 4%. The UK was led by the oil & gas sector, up over 15%, and telecommunications. Software stocks also rose by more than 10%, as the sector bounced back, after having been over-sold on fears of AI disruption. The worst performing sectors included pharmaceuticals, where AstraZeneca had a disappointing drug trial result, as well as travel & leisure and utilities.
Portfolio performance was well ahead of the index. Merchants’ Net Asset Value (NAV) total return was 7.63% compared to 3.69% from the benchmark, FTSE All-Share index. Two of the companies purchased in June – Sage and Wolters Kluwer - were among the top 5 contributors to outperformance, rising nearly 20% and benefitting from the bounce in software and related stocks. RS Group and Pets at Home were also up around 20%, whilst not owning AstraZenca was beneficial.
On the negative side, IG Group fell heavily at the end of the month, as the company announced a large US acquisition of a US sports betting company. Not owning HSBC and having an underweight position in Shell also held back relative returns, as both stocks posted double digit returns.
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"the UK stock market, which has limited exposure to technology, was a bit of a safe haven and rose by 3.7%, with medium sized companies up over 4%" |
We sold the remaining position in DCC Energy which has received a recommended bid from a private equity consortium. We also sold the small position in Magnum Ice Cream Company, which had demerged from Unilever. There were no new purchases, but we added to several companies where we see good value, including Burberry, Unite Group, Shell, Harbour Energy, Serco and Sage.
The volatility in equity markets, and particularly between different sectors, is continuing to create opportunities to buy into strong businesses at attractive valuations, whilst reducing other positions where shares have moved closer to fair value. We remain positive on the outlook for capital growth and dividend income from the investment portfolio.
Simon Gergel
7 August 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
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.