Marketing Communication
History proves that the key to successful stock market investing is time in the market, and hence that investors with the endurance and patience to adopt a long-term perspective will be rewarded over time. This is especially true for investment in medium and smaller-sized companies which have the capacity to grow into larger businesses but need time to realise their full potential. Indeed, it may surprise many to learn that the UK’s medium and smaller-sized companies have generated higher returns than the UK’s largest companies, as well as outperforming global markets, over the long-term1.
The Mercantile Investment Trust (MRC) targets this vibrant, innovative, growth-oriented sector of the UK market, and its investment approach is the embodiment of the kind of enduring, patient investing that delivers long-term success. The Mercantile’s history stretches back 140 years, and with over £2bn in assets under management2, it is one of the largest UK equity investment trusts1, and also one of JPMorgan Asset Management’s flagship trusts. The Mercantile’s size also facilitates a very competitive ongoing charge and ready liquidity.
The Mercantile benefits not only from its longevity and size, but also from the long experience of its management team. Guy Anderson has more than 20 years’ industry experience, while Anthony Lynch has 15 years’ in the industry. The Mercantile’s strong long-term performance track record of outright gains and outperformance of the market, combined with a steadily growing dividend1, provide ample evidence of the value of their insights, expertise and management continuity, regardless of the prevailing market environment or economic or political developments. Long experience has taught Anderson and Lynch that periods of uncertainty, an inevitable risk factor for stock market investors, are often the ideal time for forward-looking managers to invest, as volatility generates opportunities.
The Mercantile is actively managed, and Anderson and Lynch are always alert for new opportunities, and quick to respond to emerging investment opportunities. They are equally willing to act when the investment case for a portfolio company deteriorates. However, their long-term horizon means that the trust also has some very longstanding holdings which have consistently contributed to portfolio returns over many years. For instance, its position in Softcat3 was initiated in 2015 when the company floated on the London Stock Exchange. Softcat was founded in 1993 to meet the nascent but fast-growing demand among businesses for IT infrastructure support. Continuing to grow its market share as a leading IT reseller– especially by boosting its business in the public sector – Softcat hit £1 billion in revenue in 20204. Now The Mercantile’s largest technology holding, Softcat revenues have scope to continue to grow as companies look for help in adopting generative AI solutions.
While some investors will always be tempted to seek quick and ‘easy’ short-term profits from the latest investment fad, this is a near-sighted and very risky approach likely to be fraught with disappointment, not to mention capital losses. By contrast, The Mercantile’s more considered, patient approach has delivered the kind of results that testify to the enduring merits of investing for the long-term.
