9th Apr 2025 09:07
(Alliance News) - Merchants Trust PLC on Wednesday said its performance fell only slightly short of its benchmark in its recent financial year, saying recent global market volatility shows the advantages of investing in UK listings.
The investment trust, which dates back to 1889, invests in high-yielding UK large-cap companies.
Merchants Trust said net asset value on January 31, the end of its financial year, was 572.6 pence per share, up 7.9% from 530.9p a year before. NAV total return, including dividend payments, was 13.5%, compared to 17.1% for the FTSE all-share index.
The company said the lag was primarily due to its investments in mid- and small-cap stocks, while recently the market has favoured larger companies. It also said its focus on "high and rising income" from its investments takes priority over total return.
Merchants Trust declared a final dividend of 7.3 pence, bringing the total payout for financial 2025 to 29.1p, up 2.5% from 28.4p in financial 2024. It noted that financial 2025 represented its 43rd consecutive year of dividend growth.
Chair Colin Clark noted that the UK companies in which the trust invests have substantial global exposure, with revenue coming from around the world. "It is important to remember that being UK-listed does not mean a company's fortunes are tied solely to the UK economy," he said.
"This is particularly relevant at a time, such as now, when international investors, and sometimes even UK investors, are gloomy about the domestic economic outlook."
Looking ahead, Clark said, "it remains challenging to predict when investor interest will return to the UK stock market, when UK valuations will re-rate to more 'normal' levels."
He added that Merchants Trust will remain a "patient contrarian investor". "Our manager believes that many opportunities exist to invest in well-managed, financially strong companies on attractive valuations."
Merchants Trust shares were down 0.9% to 483.00p early Wednesday in London. They are down 9.6% in the past 12 months.
The wider FTSE 250 index was down 1.9% early Wednesday.
By Tom Waite, Alliance News editor
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