The Mercantile Investment Trust: Twenty-five years of UK mid and small cap

The Mercantile Investment Trust plc celebrated its 135th anniversary in 2019, a testament to the careful stewardship and disciplined application of a founding principle.

Go to the profile of Guy Anderson
Dec 27, 2019
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The Mercantile Investment Trust plc celebrated its 135th anniversary in 2019, a testament to the careful stewardship and disciplined application of a founding principle – to “look accurately and narrowly into every security brought before us for investment”1

Since those early days, the managers have stuck closely to the original objective of “long-term capital growth from an international portfolio”, well at least to the first part of that goal. The list of initial investments demonstrated the international breadth of the founding portfolio – Rio de Janeiro Gas Company, Hong Kong and Shanghai Bank, India Rubber and Gutta Percha Company, Bank of South Australia – to name just four of the original thirty-two investments. Science and engineering featured heavily within those early investments, reflecting the passion of the time for those disciplines, and indeed today the portfolio retains an overweight position in high quality industrial engineering companies.

One significant change to the management objective occurred twenty-five years ago, on 30th June 1994, when the Board of Directors decided to switch focus to domestic markets and the investment objective was changed to “long-term capital growth from a UK portfolio of medium and smaller companies”.

Rewards of a UK focus

This turned out to be a wise decision, with that part of the market2 returning over 1482% since that date, more than double the MSCI World Index +686%3. That amounts to an additional 3% pa for over 25 years! Furthermore, UK medium and smaller sized companies have displayed the strongest performance vs other major equity indices over that period.

Source: Datastream. 30th June 1994 to 16th Dec 2019. Past performance is not a reliable indicator of current and future results.

Long-term capital growth

The Mercantile Investment Trust plc has come a long way from its foundation over 135 years ago. From an initial £129,520 fund, it has survived through wars and depressions, navigated crashes and bubbles, and successfully followed the long term capital growth objective to stand today at over £2bn. The portfolio obviously looks very different today than at foundation, but the core principles remain the same – disciplined and detailed research to identify attractive opportunities and achieve long term capital growth – and the advantages of a low-fee, closed-end vehicle, with the ability to add gearing to enhance returns, remains as relevant now as they did 135 years ago.

Guy Anderson is Head of UK Mid and Small Caps and manager of The Mercantile Investment Trust plc.


1 The Right Hon. Viscount Monck at the first public meeting of the Company in Feb 1885

2 As defined by the FTSE 250 ex.IT

3 Source: Bloomberg. 30th June 1994 to 16th Dec 2019. GBP

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Go to the profile of Guy Anderson

Guy Anderson

Fund Manager, The Mercantile Investment Trust plc, J.P. Morgan Asset Management

Guy Anderson is portfolio manager of The Mercantile Investment Trust within J.P. Morgan Asset Management's UK Equity team.

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