Merchants Investment Trust (LSE: MRCH) has been operating for 130 years, having been set up in the 1880s. Over that time it has rarely hit the headlines. Nonetheless, its low-key longevity has won it plenty of fans.
For the past four years the fund has been managed by Simon Gergel, a Cambridge graduate with 23 years’ experience. He keeps costs low by trading selectively – he tends to hold stocks for four years and is only drawn to trade when he feels a stock is undervalued. One example is BAE Systems, which has “been sold too much on the back of fears of drastic government spending cuts”, Gergel tells The Mail on Sunday.
Indeed, Gergel generally sticks to large British firms with substantial oversees operations and a strong dividend policy. Recently he invested in recruitment company Hays. He believes it offers long-term potential in Britain and “the overseas operations have structural growth opportunities as the temporary recruitment model gains acceptance”.
Alongside its low-costs – the total expense ratio is just 0.45% – Merchants Trust provides consistent performance and a steady income. The fund has returned 27.3% over the past five years compared to the 12.1% sector index. The yield has risen for 28 consecutive years – it is currently 5.99%. “For anyone wanting income that has a good chance of growing enough at least to match inflation,” this trust is worth considering, says Richard Dyson in The Mail on Sunday. The trust is currently trading at a 6% discount to net asset value.
Contact: 020-7859 9000
Merchants Investment Trust top ten holdings
| Name of holding | % of assets |
|---|---|
| Royal Dutch Shell B | 8.1 |
| GlaxoSmithKline | 7.7 |
| Vodafone Group | 6.6 |
| HSBC Holdings | 6.6 |
| BP | 5.1 |
| AstraZeneca | 4.1 |
| Scottish & Southern Energy | 3.9 |
| British American Tobacco | 3.7 |
| BAE Systems | 3.5 |
| National Grid | 3.2 |