Page 28 - DIY Investor Magazine | Issue 35

A A A VALUE VIEW:
THE MERCHANT’S TRUST PLC
DIY Investor Magazine · Oct 2022 28
Transcript: Hello and welcome to A Value View from The The Merchants Merchants Trust Trust In each edition Simon Gurgle Fund Manager at The Merchants Trust offers his thoughts on developments affecting the UK market and what it means for investors Jon Cronin: It’s great to see you you again The Merchant’s Trust SG: Well yet again things look very different to how we thought they would be at the the the the start of the the the the year It’s not just the the the the has been around for Over 130 years I believe What do you Brexit referendum this time around or the COVID pandemic make of that Simon?
Simon Gurgle: Hi Jon it’s great to to speak to to you you again The Merchants Trust has been around 133 years as as you say And yeah it’s great to to be here to to talk about that With all humility what we’re trying to do at at Merchants is take a a a a a long-term
view: see ourselves and and investors and and shareholders through difficult times times and and good times times and and to deliver outcomes that shareholders want in in terms of good performance and a a a a a rising dividend which we’ve managed to do for the last 40 years JC: Of course over that time time time there have been good times times but also some some tough times some some choppy waters as well for The Merchants Trust SG: Yes absolutely I mean we’ve had had all sorts of environments certainly over 133 year We’ve had world wars and financial crises periods periods of of very high inflation periods periods of of recession And so it’s important throughout to have a a a long term focus of what you’re trying to do: a a a long term strategy independent board of directors who are taking the view to to plan for shareholders and work out how to set up the company with the the best interests of shareholders in in in mind So yeah there’s been a a a a huge amount going on over that period but equally I think we’ve we’ve come through it very well In the last 40 years we’ve we’ve managed to grow the dividend every year and we’ve delivered very strong returns in the last few years as as well So we we we are pleased with where we’ve come out but we we we continue to see choppy times and difficult conditions JC: Any reflection Simon on on on 2022 so far?
it’s unfortunately the situation in in Ukraine which has come as as a a a a a bit of a a a a a shock to the system We’ve had a a a a a massive spike in commodity prices particularly energy but also food That’s raised the cost-of-living question for many consumers So it’s been difficult economically Within the stock market you’ve seen a a a a a reflection of that a a a a a big polarisation The commodity areas energy mining: those sectors have been very strong And some of the more defensive areas like utilities and pharmaceuticals which are more reliable they’ve also been good performers And areas that are are more cyclical – take retailing house building construction – those areas have generally been sold off by investors They’ve underperformed because investors are worried about what might happen And therefore you’re seeing again quite a a a a a wide spread of returns quite a a a volatile environment JC: And looking ahead Simon over the next few months into 2023 as well Where do do you you stand on that? How do do you you see things panning out as as much as as we dare to try and take a a a a a a a look at at the crystal ball and imagine what’s going to happen next? What’s your outlook?
SG: It’s difficult to to to be too precise about the the economic outlook There are some positive factors such as the fact fact well firstly we started this year from quite a a a a a depressed base a a a a a number of activities like travel and leisure were very depressed last year during a a pandemic And so there’s a a a a natural level of recovery in the the market Employment’s very high in the UK Wage growth is strong Interest rates although they’re going up are very low