LONDON (Alliance News) - Mercantile Investment Trust PLC said Friday it underperformed against its benchmark in its most recent financial year due to the poor performance of holdings in two companies as well as its lack of holding in Ocado Group PLC.
In its year ended January 31, the trust recorded a negative 8.0% total return on net assets. This compares to a 6.7% negative return for its benchmark of medium and small companies, which excludes investment companies.
The trust's net asset value per share dropped to 221.3 pence on January 31 from 246.6p the year before.
This lacklustre performance was put down to Mercantile Investment Trust's holding in security software company Sophos Group PLC. Sophos had delivered a strong return in 2017 but this was not maintained in 2018 due to a lack of high-profile cyber security breaches.
Jupiter Fund Management PLC also detracted from performance. The trust said that Jupiter had "spiralled downwards" in 2018, prompting Mercantile Investment Trust to exit Jupiter entirely.
In addition, not owning shares in Ocado proved to be a mistake as the online supermarket signed a number of deals during the year that boosted its shares.
Mercantile Investment Trust declared a fourth quarterly dividend of 2.55p per share, taking its total dividend to 6.3p per share from 5.3p per share. This represents a year-on-year increase of 19%.
"Despite the short-term uncertainties, there are some things we can be certain of. Mercantile invests in an area of the market which has, for structural reasons, outperformed the wider market over the long term and in two years out of every three. In addition, our managers have invested very well, outperforming their benchmark index over three, five and ten years. So, I believe that whatever the immediate future holds, by having an investment in Mercantile shareholders have 'stacked the deck' in their favour and over the long term, will continue to prosper," said trust Chair Angus Gordon Lennox.
Shares in Mercantile Investment Trust were down 0.2% at 202.93 pence on Friday.
Jupiter Fund Management (JUP)
Ocado (OCDO)