UK equity valuations providing many opportunities
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Edison Investment Research Limited
London, UK, 15 December 2023
Edison issues review on The Merchants Trust (MRCH): UK equity valuations providing many opportunities The Merchants Trust (MRCH) manager, Simon Gergel at Allianz Global Investors, has been at the helm for the last 17 years during a variety of market environments. He has remained true to his investment process, seeking high-quality companies with solid fundamentals that are trading on reasonable valuations. The manager is very encouraged by the current valuation backdrop as, in aggregate, the UK market is trading at the low end of its 20-year range and within the market there is a wide dispersion of valuation multiples. A large proportion of UK stocks, including those of quality businesses, are trading on forward P/E multiples of less than 10x, providing Gergel with a large pond in which to fish. His approach has proved successful with mid- and long-term outperformance of MRCH’s broad UK market benchmark. With the trust’s dual mandate of income and capital growth, it offers an attractive 5.2% dividend yield and has grown its annual dividends for the last 41 consecutive years.
As well as the notable outperformance versus its benchmark, MRCH’s NAV total return ranks first and second out of 20 funds in the AIC UK Equity Income sector over the last three and five years respectively. There is steady demand for MRCH’s shares; in an environment of elevated investor risk aversion the trust regularly trades at a premium. In FY23 the share base grew by nearly 10% and so far in FY24 a further c 5.4% of new shares have been issued raising c £43.0m.
All reports published by Edison are available to download free of charge from its website About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached – across institutions, family offices, wealth managers and retail investors – Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first company in-market 17 years ago, Edison has more than 100 employees and covers every economic sector. Headquartered in London, Edison also has offices in New York, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison’s reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Mel Jenner +44 (0)20 3077 5700 investmenttrusts@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn www.linkedin.com/company/edison-group-/ Twitter www.twitter.com/Edison_Inv_Res YouTube www.youtube.com/edisonitv
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