Business & Investment

Another decent year for Nick Train’s Finsbury Growth & Income Trust

The Finsbury Growth & Income Investment Trust (LON: FGT) has an excellent long-term track record and, despite losing money in 2020, is well above the benchmark.

In the final results for the year to September 30, the £ 1.9bn UK investment trust reported a loss of 7.7%. This was a credible result given the 16.6% reduction in the FTSE All-Share index over the same period.

Manager Nicktrain has a unique investment process that involves building a concentrated portfolio of high quality companies with strong brands and strong market franchises. The resulting fund is very different from the benchmark and produces significant outperformance in the long run.

Over the last decade, a total stock return of 245% has more than tripled the all-share gain of 74%, showing how good active managers can add value.

Unique portfolio

As of the end of September, the portfolio consists of only 25 holdings, with the largest 10 positions accounting for 82% of the assets. The focus is on credible consumer goods through stocks such as Diagio, Heineken and Unilever, which account for half of the fund, with an additional 27% invested in financial services businesses such as the London Stock Exchange, Schroders and Hargreaves Slansdown.

The annual portfolio turnover is because managers believe that the best way to achieve big profits is to invest in exceptional companies and sell or top slice “as rarely as possible”. It was very low at 1.3%. Train writes to your account, saying that by investing in a truly strategic way, you keep transaction costs low and not only make your investment successful, but also maximize your chances of success.

He further points out that Unilever’s share price has risen 17 times since 1988, Diageo has risen 16 times, and the fund’s other holding, the Daily Mail & General Trust, has risen eight times. Over the same period, FTSE All-Share has only tripled.

Power to add

Train recently provided an interesting update. He has two types of businesses that he wants to own more, one of which is a British company with a luxury brand, a premium brand, or an ambitious brand. Luxury beverage maker Fever-Tree, which was added to the portfolio earlier this year, falls into this category, as does fashion house Burberry, which has been maintained despite the recent slump in stock prices.

The second category consists of substantial UK companies with trusted, globally competitive assets in technology, data and analytics. Examples of holdings in this area include the London Stock Exchange and RELX, as well as new positions for the credit referral agency Experian.

Finsbury Growth & Income is the UK’s best performing equity earnings trust in the last decade. Broker Numis rates it as one of their favorite UK equity funds, even though the yield of 1.9% is well below what is available elsewhere.

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Another decent year for Nick Train’s Finsbury Growth & Income Trust Another decent year for Nick Train’s Finsbury Growth & Income Trust

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