Mercantile Investment Trust reports solid returns in tough conditions

12th Apr 2024 07:19

(Sharecast News) - UK equity investment firm Mercantile Investment Trust said managed to grow returns in the year to 31 January despite "a generally unsupportive environment".

The company reported a net asset total return based on debt at par value was 4.5% and the total return to shareholders was 6.1%, under the ten-year averages of 6.1% and 6.4% respectively.

Chair Angus Gordon Lennox said most of the company's portfolio holdings performed well during the year. "Existing portfolio holdings have been performing well despite the challenging conditions of the past year and should do even better as and when the economy strengthens," he said.

The company said worries about high inflation and elevated interest rates in the UK had dampened sentiment on equity markets for most of the year, though conditions had improved in the latter part of the period as investors started to foresee monetary policy easing in the near future.

"Nonetheless, there remains a degree of negativity priced into the market at current levels. A lack of clarity about the path of interest rates and economic outlook weighed more heavily on medium and smaller cap companies than on larger cap stocks, given that smaller businesses are usually more vulnerable to rising interest rates and economic downturns," the chair said.

The company has already paid three interim dividends of 1.45p per share for the financial year, with a fourth payment of 3.30p being declared on Friday, bringing the total payout to 7.65p, up 7% on last year.