OREANDA-NEWS. July 14, 2015. The Merchants Trust (MRCH) is a concentrated portfolio of mainly larger UK companies, with a focus on producing a high income along with capital and income growth. It uses the FTSE 100 index as a performance measure, although around one-third of portfolio holdings are outside the index. Stock selection is mainly bottom-up but manager Simon Gergel assigns holdings to broad themes, including mega-caps and cyclical recovery or turnaround situations. The trust has raised its ordinary dividend in each of the past 33 years. A move from a premium to a discount over the past six months could be viewed as a buying opportunity, particularly as MRCH has one of the highest yields in the UK Equity Income peer group, at c 5%.

At 9 July MRCH's shares traded at a discount to cum-income NAV (with debt at market (fair) value) of 1.0%. This represents a narrowing in early July from a year-to-date average discount of 3.0%. Until the turn of the year, MRCH's shares had traded more or less consistently at a premium on a cum-fair basis since the middle of 2013, and with a yield of c 5%, based on a virtually covered dividend, the discount may compress further.

For the full report see:

http://www.edisoninvestmentresearch.com/research/report/the-merchants-trust14