22nd Sep 2016 10:53
LONDON (Alliance News) - Mercantile Investment Trust PLC Thursday said its first half returns were hit hard by the UK's vote to leave the European Union, as it had positioned its portfolio for a vote to remain, leaving it invested in the UK domestic consumer sector and away from international companies.
The FTSE 250-listed Investment fund, which focuses on mid and small-cap British companies, produced a net asset value total return of negative 1% for the six months to July 31, compared to a return of 5.7% from its benchmark, the FTSE All-Share Index excluding FTSE 100 and investment trusts. Mercantile's share price return was negative 4%.
Mercantile's NAV per share stood at 1,891.00 pence at July 31, down from 1,931.80p at the end of January. Total investments at fair value dipped to GBP1.63 billion from GBP1.78 billion over the six month period.
Shares in Mercantile were up 0.1% at 1,697.00p Thursday.
Mercantile declared a second interim dividend of 10.25p, bringing total dividends for the year to date to 20.50p. The company said it anticipates a third interim dividend of 10.25p to be paid in early February 2017 but said the level of the fourth interim dividend will depend on income received in the rest of the financial year.
Mercantile said the poor result was largely a result of the performance immediately after the UK's vote to leave the European Union. Since then the fund has disposed of several holdings, reducing the portfolio to 99 holdings from 114 the week of the vote, and pushing the level of net cash to 8.3% at the period end from 4.4% at the start of the year. Mercantile said that net cash level now stands at 5.2%.
Mercantile said it now aims to become less dependent on a favourable UK macroeconomic environment, with greater exposure to industrials and lower exposure to domestic consumers, as well as a more even balance between domestic and international revenue.
"Since the result of the EU referendum market volatility has increased, although economic data releases and company trading statements have generally shown little change from previous indicators. The economy grew slowly during the first half of the year, and continues to improve, although at a more gradual rate. The board remains confident in the prospects for small-and medium-sized UK companies and the Investment Managers' ability to take advantage of these, particularly in light of the substantial gearing capacity that is available and currently unutilised" said Chairman Hamish Leslie Melville.
By Adam Clark; [email protected]
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Mercantile Investment Trust PLC