Mercantile Investment Trust
Rated Fund 2014, 2016-20. Ideal for investors seeking mid-cap focus
Launched in 1884, Mercantile is one of the UK's oldest investment trusts and today has assets of more than £2 billon. Morningstar is encouraged by clearer accountability of decision-making, which is feeding into improved investor returns. Guy Anderson has co-managed the trust since 2012 and took over as lead manager in 2016 after veteran manager Martin Hudson stepped back. Previously, the pair were each responsible for half of the portfolio by dint of their respective sector coverage, but having a single decision-maker is having positive consequences for accountability and portfolio construction, according to Morningstar analyst David Holder. Anthony Lynch has helped to run the strategy since 2009 alongside a dedicated investment analyst.
Part of the JP Morgan stable, Mercantile's primary objective is to achieve capital growth by investing in UK medium-sized and smaller companies, but the trust also aims to increase its dividend at least in line with inflation. The portfolio is well-diversified, with around 100 holdings, and may include a few FTSE 100 companies that have been promoted to that index since the trust bought them, though generally this triggers a sale and the money is reinvested further down the size scale. Investments tend to fall into three categories: companies with sustainable competitive advantages operating in attractive end markets; companies experiencing positive change such as restructuring; and companies with attractively valued assets that have been overlooked or misunderstood by the market. All tend to be run by strong management teams that are focused on shareholder returns.
Shares in the trust benefited from the discount narrowing last year, which saw them trade close to par, though the three-year average is almost 10%. They yield 2.6% and income is paid quarterly.
Narrative and ratings content all as of January 2020.See all Money Observer rated funds
|JPM GBP Liquidity LVNAV X (dist.)||8.07 %|
|Bellway PLC||3.67 %|
|Softcat PLC||3.19 %|
|Derwent London PLC||2.68 %|
|Games Workshop Group PLC||2.64 %|
|Computacenter PLC||2.60 %|
|Polymetal International PLC||2.55 %|
|Intermediate Capital Group PLC||2.54 %|
|John Laing Group PLC||2.52 %|
|Man Group PLC||2.49 %|
|United Kingdom||96.42 %|
|Consumer Cyclical||21.13 %|
|Financial Services||15.07 %|
|Real Estate||8.60 %|
|Basic materials||8.54 %|
|Consumer Defensive||8.03 %|
Guy Anderson, executive director, is a portfolio manager within the Small/Mid Cap team of the J.P. Morgan Asset Management European Equity Group in London. An employee since 2012, Guy was previously an analyst at Breeden European Capital Management. Before this, Guy was an Investment analyst at Pendragon Capital Management Limited. Prior to this, Guy worked as a project manager in the Corporate and Investment Banking division at Oliver Wyman. He obtained an M.Eng (Hons) in Engineering from Oxford University. Guy is CFA charterholder.
Anthony Lynch, vice president,is a portfolio manager within the J.P. Morgan Asset Management European Equity Group and co-manages The Mercantile Investment Trust, specialising in smaller and mid-sized UK equities. Anthony joined in 2009, initially as an analyst, and now co-manages the Investment Trust. Prior to this he obtained a B.A. (Hons) in Economics from Durham University. He is a CFA charterholder.
Data provided by Morningstar.
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