The board of the Lindsell Train Investment Trust has decided to take out an insurance policy on the fund managers’ lives to protect against key man risk.
The £74.5m investment trust was first launched in 2001 with a small holding in the company of the same name, which was founded by Nick Train and Michael Lindsell.
That holding, however, has grown to nearly 26 per cent of the net asset value of the Lindsell Train Investment Trust.
In the half yearly report released today, the chairman of the trust, Donald Adamson, noted that a key risk is the “unexpected demise of one of the founders”.
Mr Adamson first warned of this “key man risk” in the annual report released in June.
Given this risk, the board of the trust has decided to take out an insurance policy on the lives of Mr Train and Mr Lindsell for £6m each for the payment of approximately £20,000 per annum for the next five years.
Investment trust analyst Numis said the long term performance had been “impressive” and it “can understand why it has consistently traded on a premium for the past few years”, however, it said it finds it hard to recommend the vehicle.
The trust’s shares currently trade on a premium of 8 per cent compared to the net value of the trust’s assets, however, this has been as high as 20 per cent in previous years.
