Register Log-in Investor Type

Mercantile cuts management fee

Mercantile’s net asset value total return in the six months to 31st July 2016 was -1.0%, compared to a return of +5.7% from its benchmark index, the FTSE All-Share, excluding FTSE 100 constituents and investment trusts. The share price return was -4.0%. A second interim dividend of 10.25 pence per share has been declared. Together with the first interim dividend of 10.25 pence this brings the total dividend for the year to date to 20.50 pence (2015: 20.00 pence). The Board anticipates that there will be a third interim dividend of 10.25 pence to be paid in early February 2017. The level of the fourth interim dividend will depend on income received for the balance of the current financial year. The Board recognises shareholders’ desire for a growing dividend in line with the investment policy, whilst maintaining a prudent view and monitoring closely the level of the revenue reserve.

Following the regular review of management fees, the Board and the Manager have agreed a reduction in fees. The current rate of 0.50% per annum of the Company’s market capitalisation will fall by 10% to 0.45% per annum. This will take effect in two equal steps on 1st February 2017 and 1st February 2018.

The Company’s portfolio was positioned, in line with the consensus, for a vote to remain – overweight domestic consumer and underweight international. Since the outcome of the EU referendum the investment managers have made some changes to the portfolio. This has resulted in a somewhat more concentrated portfolio (99 holdings from 114 the week of the vote) and an increase in the level of net cash from 4.4% net cash at the start of the year to 8.3% at the period end (and 5.2% net cash at the time of writing). The aim of this repositioning has been to focus on those companies where the investment case is less dependent upon a favourable UK macroeconomic environment, or where the valuation remains compelling. As a result of these changes, the portfolio is now more evenly balanced between domestically and internationally derived revenue and from a sector perspective has slightly lower exposure to the domestic consumer in favour of greater exposure to industrials.

MRC : Mercantile cuts management fee

Leave a Reply

Your email address will not be published. Required fields are marked *

Please review our cookie, privacy & data protection and terms and conditions policies and, if you accept, please select your place of residence and whether you are a private or professional investor.

You live in…

You are a…