The Merchants Trust - New Benchmark, Same Focus On Income/growth
Edison | Jun 12, 2017 08:05AM ET
The Merchants Trust (LON:MRCH) aims to generate a high and growing level of income with the potential for long-term capital growth from a relatively concentrated, actively managed portfolio of UK equities. At end-January 2017, the benchmark was changed from the FTSE 100 index to the FTSE All-Share index, reflecting the evolution of the portfolio over several years towards a lower exposure to large-cap equities, giving the manager the opportunity to select from a broader range of dividend-paying companies.
MRCH has a competitive yield compared to the UK stock market and also versus its peers. It has a progressive dividend policy and has increased its annual dividend for the last 35 consecutive years.
Investment strategy: Three pillars to the process
The manager is able to draw on the broad resources of Allianz (DE:ALVG) Global Investors (AllianzGI); he constructs MRCH’s portfolio predominantly on a bottom-up basis based on three elements: fundamentals, valuation and themes. Fundamental analysis focuses on the competitive position of the business and its financial strength; valuation considerations are based on absolute and relative metrics and dividend yield; and themes take into account the macroeconomic environment and the stage of the business cycle, along with industry and secular trends.
The portfolio is diversified across industries and typically holds c 40-50 positions in primarily larger-cap UK equities. Selective writing of covered calls is used to enhance income, and gearing of between 10-25% of net assets at the time of drawdown is permitted.
To read the entire report please click on the pdf file below:
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.