Mercantile Investment Trust FY returns trail benchmark

(Sharecast News) - Mercantile Investment Trust reported a positive set of annual results on Thursday, saying performance remained solid despite lagging its benchmark over the period. Mercantile delivered a net asset value total return of 12.3% for the year to 31 January, compared with a 15.8% gain for its benchmark. Share price total returns for the period were 12.5%.

Over three years, Mercantile delivered a cumulative NAV total return of 35.1% against 32.4% for the benchmark, while the share price rose 41.9%. The five‑year NAV return stood at 42.5% versus 39% for the benchmark, with a 36.9% share price gain, and over ten years, NAV increased 109.3%, ahead of the benchmark's 85.1%, and the share price returned 111.3%.

The FTSE 250-listed trust said its performance for the year was supported by strong stock selection in industrials and selected financials, while investment banking, brokerage services and consumer discretionary holdings weighed on returns.

During the year, Mercantile repurchased 63.8m shares into treasury at an average 9.9% discount to NAV, adding 0.9% to NAV total return. Mercantile also declared a total dividend of 8.2p per share, up 3.8% on the prior year's 7.90p.

Chaimrman Rachel Beagles said: "Dealing with geopolitical events has, unfortunately, in recent years, become 'business as usual' for our portfolio managers. The recent war in Iran raises the spectre of heightened oil prices, and if prolonged, threatens the downward trend of inflation and interest rates in the UK. However, levels of corporate and personal sector debt are historically low; valuations of medium and smaller companies remain attractive relative to history and larger peers.

"Your portfolio is invested in high quality companies, with conservative balance sheets and strong market positions. Further, increased levels of market volatility should offer opportunities for active stock pickers. My fellow directors and I remain confident in your portfolio managers' ability to guide the portfolio through any challenges, whilst taking advantage of emergent investment and valuation opportunities. This should ensure that the company continues to deliver both positive real returns and outperformance over the long term."

As of 0845 BST, Mercantile Investment shares were up 0.80% at 253p.

Reporting by Iain Gilbert at Sharecast.com

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