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(AWP Alliance News) - Merchants Trust PLC on Friday said total return was "strong" and outperformed its benchmark in the first six months of the year.
The trust, based in London and managed by Allianz Global Investors UK Ltd, is dedicated to investments in higher yielding large UK companies.
Merchants reported a net asset value total return of 9.3% for the six months ended July 31, outperforming the FTSE All-Share Index benchmark, which returned 7.9% in the period.
Net asset value per share was 697.5 pence at July 31, compared with 588.5 pence a year earlier. Net asset value with debt at fair value was 710.5 pence.
Merchants' pretax profit from investments rose 0.3% in the period to GBP26.7 million, from GBP26.6 million a year earlier. Total income from the portfolio grew 1% to GBP29.1 million, from 28.8 million.
The trust noted its portfolio, especially its medium-sized UK companies, was not immune to market volatility driven by concerns over inflation and economic growth.
The trust said that "the path for monetary policy in the UK and elsewhere remains difficult to predict," but that the UK economy had proved resilient. Regarding the change of political leadership in the UK, it commented: "It is too early to judge if the investing environment will be substantially different under the new administration, but it faces the same economic and fiscal challenges as the last."
The trust said its "successful stock selection" offset the volatility. Merchants added eight new holdings to its portfolio, including investments in software businesses it believed were "excessively marked down because of concerns over the disruptive impact of artificial intelligence", and eliminated five.
The greatest contributor to the portfolio was Lloyds Banking Group PLC, which Merchants highlighted had a 30% interim dividend increase.
Merchants declared a second interim dividend of 7.5 pence per share, payable on November 19, with an ex-dividend date on October 8, which follows a first interim dividend of 7.5 pence per share.
Chair Colin Clark reiterated that he will step down on September 30 as previously announced. He will be replaced by Karen McKellar, already part of the board. Clark said the board expects to appoint a new non-executive director later in the year.
Looking ahead, the trust noted that economic and geopolitical outlook remain "unusually difficult" to predict and that it would continue to evaluate a wide range of companies, particularly among medium-sized businesses.
Merchants Trust was down 0.7% at 667.00 pence per share on Friday morning in London.
By Camilla Borri, Alliance News reporter
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