London, UK, 11 October 2023

Edison issues update on The Merchants Trust (MRCH): UK market is ‘a stock picker’s dream’

The Merchants Trust (MRCH) has been managed by Simon Gergel at Allianz Global Investors for the last 17 years. He describes the valuation backdrop in the UK market as ‘a stock picker’s dream’, as in aggregate, UK stocks are trading at the low end of their 20-year range, and company valuations vary significantly, thereby affording the manager opportunities to identify reasonably priced businesses that have strong fundamentals and are operating in industries with favourable dynamics. Gergel’s strategy has proved successful as MRCH is comfortably ahead of its benchmark over the last three, five and 10 years. Growing income is an important feature of the trust, and it has paid higher dividends for the last 41 consecutive years. Reflecting the board’s confidence that this trend can continue, MRCH’s first two FY24 interim dividends are 3.6% higher year-on-year, which is an acceleration in growth versus FY23, when the annual dividend was a more modest 1.1% above the level paid in FY22.

There is robust demand for MRCH’s shares. In FY23, its share base was increased by around 10%, raising c £69.3m, and share issuance has continued in FY24. The trust regularly trades at a premium; the latest 1.6% premium to cum-income NAV is not dissimilar to its average 0.8% premium over the last 12 months.

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