Mercantile Investment Trust
Rated Fund 2014 and 2016-19. Ideal for investors seeking a mid-cap focus
Launched in 1884, Mercantile is one of the UK’s oldest investment trusts and today has assets of almost £2 billion.
Morningstar believes it is on an upward curve, and we agree. Guy Anderson took over as lead manager in 2016 after veteran manager Martin Hudson stepped back as primary decision-maker.
Hudson remains on the team alongside fellow co-manager Anthony Lynch. Previously, Anderson and Hudson were each responsible for around half of the portfolio, but having a single decision-maker has positive consequences for accountability, portfolio construction and process implementation, according to Morningstar analyst David Holder.
Investors are also benefiting from a focus on reducing fees: from 0.5% to 0.475% in February 2017 and to 0.45% from February 2018.
Part of the JPMorgan stable, Mercantile’s primary objective is to achieve capital growth through investing in UK medium-sized and smaller companies, but the trust also aims to increase its dividend at least in line with inflation.
The team is not style-driven; bottom-up stock selection drives portfolio construction. Investments tend to fall into three categories: companies with sustainable competitive advantages operating in attractive end markets; firms 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 focused on shareholder returns.
The portfolio is well-diversified, in 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 reinvestment of the proceeds further down the size scale.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|JPM GBP Liquidity LVNAV X (dist.)||8.16 %|
|100m 6.125% Secured Bond 2030||5.30 %|
|Intermediate Capital Group PLC||4.04 %|
|75m 6.125% Secured Bond 2030||3.99 %|
|AVEVA Group PLC||3.25 %|
|Bellway PLC||3.24 %|
|Grafton Group PLC||2.67 %|
|SSP Group PLC||2.47 %|
|Softcat PLC||2.34 %|
|Marshalls PLC||2.28 %|
|United Kingdom||97.02 %|
|Consumer Cyclical||23.42 %|
|Financial Services||15.82 %|
|Basic materials||12.88 %|
|Real Estate||8.92 %|
|Consumer Defensive||5.92 %|
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.
Martin Hudson, managing director, is a portfolio manager within the J.P. Morgan Asset Management European Equity Group, responsible for The Mercantile Investment Trust and specialising in smaller and mid-sized UK equities. An employee since 1982, he was previously an investment manager in the UK Portfolios Group, managing both the UK equity portfolio of the Fleming Fledgeling Investment Trust (now the JPMorgan US Smaller Companies Investment Trust) and segregated pension fund portfolios. Before this he was manager of the UK investment research department and previously was a building and property analyst. Prior to joining the firm, he worked on manufacturing and acquisitions for Blue Circle Industries. Martin obtained an M.A. in Natural Sciences from the University of Cambridge.
Data provided by Morningstar.
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