Fund of the week: how to shelter from the Greek storm

Fund of the week: Mercantile investment trust

“Few investment funds escaped  the fallout” from the Greek crisis  last week, writes Jeff Prestridge in The Mail on Sunday. Those with direct European exposure were punished most, but even UK-focused funds were hit. So if you’re looking to minimise
your exposure to Europe now that “Grexit” is firmly on the cards, which funds might you consider?

The Mercantile Investment Trust  (LSE: MRC), a 130-year-old trust  currently managed by JP Morgan, is  one candidate. It has “minimal” exposure to Greece, manager Guy Anderson tells Prestridge, other than a holding in Dixons Carphone. Dixons owns Kotsovolos, Greece’s largest electrical retailer, but this only makes up 1.5% of its operating profits. More broadly, the fund’s holdings only generate 17% of their revenues from continental Europe, which should reduce the risks if other countries run into difficulties.

Mercantile’s mandate is to generate capital growth by investing in UK-listed medium and smaller firms. A recent strong performer was Irish energy company DCC, which posted strong results and bought out French company Butagaz. Anderson says he has a particularly positive outlook on firms exposed to the UK consumer, such as Greggs and Poundland, because “wages are growing faster than living costs for the first time in five years”.

The fund has delivered a 15.6% return over one year, 90.3% over three years and 124.7% over five years – better than its benchmark. It pays a quarterly dividend, which it aims to grow at least with inflation; this increased by 2.5% last year. The ongoing charge is 0.49%.

Mercantile Investment Trust top ten holdings
Holding % of assets
DCC 2.40%
Howden Joinery 1.80%
Ricardo 1.70%
Segro 1.70%
Jardine Lloyd Thompson 1.60%
Inchcape 1.50%
Dixons Carphone 1.50%
Jupiter Fund Management 1.50%
B&M European Value Retail 1.50%
Derwent Valley 1.50%