The Mercantile Trust (MRC)

MRC has a long-standing reputation in the UK investment trust sector, having been established in 1884. Its core focus since 1994 has been on generating long-term capital growth and rising dividends from a 70-strong portfolio of UK-listed mid and small-cap companies. The company adopts a quality growth strategy, targeting high-return, competitively advantaged companies trading at attractive valuations. Despite macroeconomic headwinds, such as interest rate volatility and political uncertainty, MRC has delivered robust NAV returns, recently achieving a 14% gain in the financial year ending January 2025.In this podcast, manager Guy Anderson outlines how MRC has navigated tough market conditions through bottom-up stock selection focused on companies generating sold cash flows; why the trust is slightly overweight in UK domestic cyclicals, including housebuilders and retailers, which Anderson believes are undervalued due to a disconnect between public sentiment and economic reality, and why increased conviction in market opportunities means the company’s gearing remains at the higher end of its usual range, while continuing to help it consistently grow its dividend above inflation.