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The Merchants Trust

FY18 outperformance continuing in FY19

Review | Investment Companies | 22 May 2018

The Merchants Trust (MRCH) is managed by Simon Gergel at AllianzGI. He aims to generate a high and growing level of income, with the potential for long-term capital growth, from a portfolio of UK equities. The manager considers there are great opportunities in the UK stock market for high-yield investors, and that in aggregate UK stocks are looking attractively valued compared to global equities. MRCH has a distinguished dividend history; payouts have grown in each of the last 36 consecutive years. In FY18, the annual distribution was 2.5% higher than in FY17 – a larger growth rate than in recent years, reflecting higher dividend growth from portfolio companies, but also due to MRCH’s lower interest costs following the refinancing of a tranche of its high-cost debt in late 2017.

The Merchants Trust

Benefits from announced debt refinancing

Review | Investment Companies | 03 Nov 2017

The Merchants Trust (MRCH) adopts a long-term approach to investing in UK equities, aiming to generate an above-average level of income along with long-term capital and income growth. The trust has announced a refinancing of its first tranche of high-cost debt, which will bring its effective cost of borrowing down from 8.5% to 6.1%, saving GBP 2.8m in annual interest costs and locking in low-cost funding for the next 35 years. The board adopts a progressive dividend policy; annual dividends have increased for the last 35 consecutive years and the current 5.0% yield compares favourably with the average of MRCH’s peers in the AIC UK Equity Income sector.

The Merchants Trust

New benchmark, same focus on income/growth

Review | Investment Companies | 12 Jun 2017

The Merchants Trust (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.

The Merchants Trust

High income and dividend growth

Review | Investment Companies | 09 Jan 2017

The Merchants Trust (MRCH) invests in a portfolio of primarily large-cap UK equities aiming to generate income and long-term capital growth. MRCH differentiates itself from its peers due to its high income and dividend growth – its dividend yield is consistently above the benchmark FTSE 100 index – and has 34 years of consecutive annual dividend growth. Near-term investment performance has improved; this is partly a function of rising bond yields as investors are starting to rotate away from expensive bond proxies and towards more cyclical, higher-yielding sectors of the UK stock market. MRCH is now outperforming its benchmark over five years. Gearing of up to 25% of net assets is permitted.

The Merchants Trust

Executive Interview - The Merchants Trust

Edison TV: | Investment Companies | 26 Jul 2016

Launched in 1889, The Merchants Trust (LSE: MRCH) has evolved throughout its history into an investment trust seeking a high and growing income from a portfolio of UK equities. It is managed by Simon Gergel, chief investment officer of UK equities at AllianzGI, and is both the largest and the oldest of the trusts managed by AllianzGI. MRCH is differentiated from peers in the UK Equity Income sector by using the FTSE 100 index as a performance benchmark; the trust currently has a slant towards some of the largest stocks in the index, although it also has c 35% of assets invested in companies outside the 100 largest. MRCH is one of the highest-yielding equity investment trusts and has a 34-year record of annual dividend growth.

The Merchants Trust

High and growing income

Review | Investment Companies | 07 Jul 2016

The Merchants Trust (MRCH) is a very well-established trust investing in UK equities, primarily in higher-yielding, large-cap companies, which aims to produce high income and long-term growth in capital and income. While recent months have been a difficult period for investing in this area, the manager sees good value in the portfolio across a range of themes. MRCH ranks highly in the AIC UK Equity Income sector in terms of dividend yield (c 6.0% vs 4.5% sector average) and the annual dividend has increased in each of the last 34 years, providing investors with an important source of total return in an environment of low earnings growth. The latest annual dividend was more than covered by income.

The Merchants Trust

Executive Interview - The Merchants trust

Edison TV: | Investment Companies | 11 Feb 2016

Launched in 1889, The Merchants Trust (LSE.MRCH) has evolved throughout its history into an investment trust seeking a high and growing income from a portfolio of UK equities. It is managed by Simon Gergel, chief investment officer of UK equities at Allianz Global Investors, and is both the largest and the oldest of the trusts managed by AllianzGI. MRCH is differentiated from peers in the UK Equity Income sector by using the FTSE 100 index as a performance benchmark; the trust currently has a slant towards some of the largest stocks in the index, although it also has c 35% of assets invested in companies outside the 100 largest. MRCH is one of the highest-yielding equity investment trusts and has a 33-year record of annual dividend growth.

The Merchants Trust

High yield from focused UK equity portfolio

Update | Investment Companies | 17 Dec 2015

The Merchants Trust (MRCH) offers one of the highest yields currently available on a mainstream equity investment trust (5.9% at 11 December), as well as the potential for capital growth. Manager Simon Gergel has positioned the trust with a tilt towards mega caps in areas such as banks, where dividend growth could come back strongly as legacy issues subside. The focused portfolio of 44 stocks also has exposure to UK economic growth via the industrial and consumer services sectors, and selected holdings in resources offer recovery potential. MRCH pays dividends quarterly and has a 33-year record of annual dividend growth. The discount has widened over the year as large caps have fallen from favour, with scope for it to narrow to a level more in line with long-term averages.

The Merchants Trust

Executive Interview - The Merchants Trust

Edison TV: | Investment Companies | 09 Nov 2015

The Merchants Trust (MRCH) is a concentrated portfolio of predominantly larger UK companies, with a focus on producing a high income along with capital and income growth. It is benchmarked against the FTSE 100 index, but approximately one-third of the portfolio holdings are outside the index. Stock selection is mainly bottom-up, but manager Simon Gergel assigns holdings to broad themes including mega-caps and turnaround situations.

The Merchants Trust

UK equity 'best ideas' with 5% dividend yield

Review | Investment Companies | 13 Jul 2015

The Merchants Trust (MRCH) is a concentrated portfolio of mainly larger UK companies, with a focus on producing a high income along with capital and income growth. It uses the FTSE 100 index as a performance measure, although around one-third of portfolio holdings are outside the index. Stock selection is mainly bottom-up but manager Simon Gergel assigns holdings to broad themes, including mega-caps and cyclical recovery or turnaround situations. The trust has raised its ordinary dividend in each of the past 33 years. A move from a premium to a discount over the past six months could be viewed as a buying opportunity, particularly as MRCH has one of the highest yields in the UK Equity Income peer group, at c 5%.

The Merchants Trust

High-yielding, focused UK portfolio

Review | Investment Companies | 04 Dec 2014

The Merchants Trust (MRCH) is a concentrated portfolio (c 45 stocks) of mainly blue-chip equities, chosen for their potential to provide a high and growing income as well as long-term capital appreciation. The trust has raised its ordinary dividend in each of the last 32 years. With a high yield of c 5%, the trust trades on a slight premium and has been issuing shares to meet demand.

The Merchants Trust

Large-cap contrarian with above-average yield

Review | Investment Companies | 04 Jun 2014

The Merchants Trust (MRCH) takes a contrarian, value-driven approach to investing in mainly large-cap UK companies, with the aim of achieving a high and growing income as well as capital growth. Managed by Allianz Global Investors and its precursor companies since launch in 1889, it has evolved from a diversified global portfolio to a focused UK specialist, and is the only trust in its peer group with a FTSE 100 index benchmark. It has beaten the index in price and NAV terms in three of the last four years to 31 May, and its 4.6% yield is among the highest in its sector. With its dividend o which has a 32-year record of growth o now fully covered by income, it has recently been issuing shares at a premium to NAV.