Lindsell Train outperforms but defensive stocks suffer

Lindsell Train Investment Trust strongly outperformed its benchmark in the six months to September 30, but the chairman warned its “core consumer franchises” had not done so well.

The £61.4m trust’s share price rose by 15.9 per cent during the half year, compared with a 2 per cent rise for the benchmark, which is the index of the annual average yield on the UK 2.5 per cent Consolidated Loan Stock.

But “core consumer franchises,” which make up a third of the portfolio’s NAV, suffered losses, with Unilever falling by 12 per cent, and Heineken by 6 per cent, amongst others, which chairman Donald Adamson said was partly down to their previous strong performance and some weakness in sales due to falling emerging market currencies

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However, the trust, which is managed by Nick Train, still delivered strong performance, which was partly due to the 37 per cent rise in value from the trust’s largest holding Lindsell Train Ltd, the chairman said, adding that “it remains a most important source of potential further value creation for shareholders.”

But he warned that “any reversal in LTL’s fortunes represents the biggest risk for the company now that it has become such a large percentage of assets and bearing in mind that its dividends make up almost half of the company’s revenues.”