Rated Fund 2014, 2016-2017. The largest UK-focused investment trust
Mercantile belongs to the JPMorgan investment trust stable. Launched in 1884, it is one of the UK's oldest trusts. With assets of nearly £2 billon, it is also the largest UK-focused investment trust.
Its primary objective is to achieve capital growth through investing in UK medium-sized and smaller companies, however the trust also aims to increase its dividend at least in line with inflation over the long term.
In 2016, Guy Anderson took over as lead manager of the trust although Martin Hudson, who was the lead manager for over 20 years, remains on the team along with fellow co-manager Anthony Lynch.
Each manager specialises in particular sectors and takes responsibility for investment decisions within these sectors. They are not style-driven and bottom-up stock selection drives portfolio construction.
Their investments tend to fall into three categories: companies with sustainable competitive advantages operating in attractive end markets; companies experiencing positive change such as restructuring; and companies with attractively valued assets overlooked by the market.
They say the feature that companies in all three categories have in common is that they will be run by strong management teams that are focused on shareholder returns.
The portfolio is well diversified, with over 100 holdings, and may include a few FTSE 100 companies that have been promoted to that index since the trust bought them. However, generally if companies move into the FTSE 100 they are sold and the money is reinvested further down the size scale.