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Value investing drives Train’s trust | Trustnet Skip to the content

Value investing drives Train’s trust

03 February 2011

Trustnet speaks to Lindsell Train Investment Trust’s manager Nick Train as he celebrates his 10th year managing the vehicle.

By Lora Coventry,

Senior Reporter, Financial Express

The internet, financial markets and consumption growth in emerging markets will be the three profound global themes driving growth and stock market returns going forwards, according to Nick Train.

Performance of investment trust vs sector over 10-yrs


Vehicle 1-yr returns (%)
3-yr returns (%) 5-yr returns (%) 10-yr returns (%)
IT Global Growth sector
24.78 19.36
27.32
76.13
Lindsell Train Ltd - Lindsell Train IT
37.82 66.82
104.81
120.91

Source: Financial Express Analytics

Financial Express data suggests Lindsell Train Investment Trust has outperformed its IT Global Growth sector over one, three, five and 10 years, which the manager attributes to his buy-and-hold philosophy.

Train (pictured right) freely admits, however, that this strategy can mean the trust may lag its peers or suffer discrete period losses.ALT_TAG

"I have a very clear distinction in my mind between momentum investing and value investing. I’m a value investor, which can mean that discrete period performance can be almost random," he said.

"Metals, gold and oil exploration are where the action – or the easy money – is at the moment, so I thought we’d have been penalised for not holding those sectors in the portfolio in 2010."

The trust outperformed its FTSE All Share benchmark by 14 per cent in 2010, returning 28.7 per cent. By the same token, the fund lost 31 per cent in 2008, while the benchmark lost 30.1 per cent.

The core of Lindsell Train IT’s portfolio has not changed since its launch 10 years ago, favouring breweries, media stocks and financials. Brewery Youngs, media group Daily Mail & General, and Iron Bru manufacturer AG Barr are among the stocks to have stayed in the portfolio.

In spite of the fund's outperformance, Train admits his buy-and-hold strategy doesn’t always pay off: "Reed Elsevier is one stock we bought a decade ago, believing it to be undervalued. It’s yet to perform well for me," he said.

"Its dividend has grown, but it’s not given great growth overall."

Other media stocks have boosted the fund recently, however, with Pearson, Euromoney and Daily Mail & General all contributing to last year’s outperformance.

While portfolio turnover is very low, Train has recently sold out of Lloyds Bank preference shares and bought holdings in Green King.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.