Nick Train has bought Hargreaves Lansdown shares for his £3.1bn Lindsell Train Global Equity fund, the first new investment in the fund for two years.
Mr Train has long been keen on the shares of the FTSE 100 fund supermarket.
Hargreaves Lansdown is a top 10 investment in both his UK mandates, the £1.3bn Finsbury Growth and Income Trust, and the £4.1bn Lindsell Train UK Equity fund.
He said the shares “may seem expensive by conventional measures” such as price-to-earnings ratios, but he added “Hargreaves Lansdown is not a conventional company.”
He said the company doesn’t need to commit fixed capital to grow, and that the share price of the company has been a relatively tepid performer in recent years as the company has dealt with regulatory changes and the impact of lower interest rates.
Mr Train’s said that while regulation may well increase Hargreaves Lansdown’s costs, technological innovation will help maintain returns over the long-term.
He said the company is likely to benefit from the structural move in the pensions market away from defined benefit schemes administered by institutions that won’t be Hargreaves Lansdown customers, and towards self administered schemes run by individuals, who could be Hargreaves Lansdown customers.
Mr Train said it has been a tough couple of months for several of the holdings in his funds, and for his style of investing generally.
He said the sort of long-term compounding consumer staple stocks he typically buys have fallen from favour with investors as the market becomes more optimistic about global growth and switches to commodity and emerging market assets.
Mr Train said: “We are not surprised to see a rotation in some investor portfolios toward commodities and cyclical companies; after all global growth is purportedly picking up and certainly emerging market equities have begun to do better this year.
"We continue to believe that being optimistic about global and emerging market growth means that one should be very bullish about the prospects for Diageo, Mondelez, Unilever and Heineken too (to name some of our holdings) – because of their wonderful market positions in those geographies.
"But we accept investor preferences will swing to and fro in the interim."
Andrew Summers, head of fund research at Investec Wealth and Investment, said he expects funds such as those run by Mr Train to endure a period of under performance as global growth and interest rates rise, but said the long-term performance of the fund manager is very strong.
The Lindsell Train Global Equity fund has returned 166 per cent over the past five years, compared with 84 per cent for the average fund in the sector in the same time period.
Laith Khalaf, senior analyst at Hargreves Lansdown said all fund manager styles fall in and out of favour, but the key is to maintain a diversified portfolio.