Train defends performance of £1.3bn trust

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Train defends performance of £1.3bn trust

Nick Train has acknowledged his £1.3bn Finsbury Growth and Income trust yields much less than the market, but said this is because he is chasing future growth.

The fund manager said his trust yields 2.5 per cent, which is only about 60 per cent of the yield of the FTSE 100.

He said this contrasts with the position a decade ago, when his trust yielded more than the market average.

He said the trust yields less than the market because he is invested in companies that are "part of the digital future", and so have greater growth potential than the market as a whole.

He said those investing in his funds have access to higher growth and lower income, while rival investment vehicles offer higher income but lower growth.

The Finsbury Growth and Income trust has returned 72 per cent over the past five years, compared with 26 per cent for the average trust in the AIC UK Equity Income sector in the same time period.

The trust is the top ranked in the sector over three and five years.

Among the companies in which he is invested that he believes are part of the digital future is former owner of the Financial Times Pearson, which cut its dividend last year, and Hargreaves Lansdown.

Mr Train added that many of the companies that offer the highest yield in the FTSE 100 are banks, oil companies and tobacco companies, which he feels have lower growth potential and in which he has not invested for a decade.

The fund manager has said that the biggest lesson he has learned in his investment career is that "I do not know how to read a bank balance sheet."  

Laith Khalaf, senior analyst at Hargreaves Lansdown said Mr Train's growth style of investing can fall out of favour for periods of time but it has a strong track record and his investment trust should be used in conjunction with other funds.

david.thorpe@ft.com