Merchants Trust PLC on Thursday said that its investment managers remained optimistic in the long-term prospects of the UK market, despite the company reporting a decline in net asset value.

The London-based investment trust, which mainly backs large higher-yielding UK companies, said net asset value per share fell 8.4% to 530.9 pence as at January 31 from 579.7p a year prior.

Noting that the UK market was not as boosted by tech and AI stocks as the US market, Merchants Trust said total return was 1.9% in the financial year ended January 31, outperforming the FTSE All-Share, which had a negative return of 1.9%.

Merchants Trust highlighted that it issued shares worth £46 million over the financial year, noting strong demand.

The company proposed a final dividend of 7.1p share, bringing the total to 28.4p, up 2.9% from 27.6p paid for financial 2023.

‘Shareholders will be aware that the UK stock market is still a mix of both lowly priced stocks some of which offer ’value’ and higher rated ’growth’ stocks. Unfortunately, the period under review was a difficult one for the more modestly priced stocks that our manager tends to favour due to his ’value’ investment style. Whilst this produced a relatively disappointing 1-year picture for Merchants shareholders, the longer-term record remains strong, with outperformance of both the industry benchmark, as well as the sector peer average, over 3 and 5 years,’ Merchants Trust said.

Looking ahead, Chair Colin Clark said that the company’s investment managers ‘remain optimistic for the long-term for the UK market and believe that there is considerable pent-up value in the market. That value, they believe, is both evident in the aggregate valuation of the market compared to global peers, but also between the more lowly-priced and the higher rated segments of the UK market.’

Merchants Trust shares were flat at 529.00 pence each on Thursday morning in London.

Copyright 2024 Alliance News Ltd. All Rights Reserved.