Lindsell Train Investment Trust outperformed its benchmark in the six months to September 30, but the chairman has warned its net asset value will likely take a hit from recent market turmoil.
The £168m (Nav) investment company’s share price increased 17.4 per cent during the half year compared with a 2 per cent increase for its benchmark, which is the average running yield of the longest-dated UK government fixed rate bond.
This compares with a 14.9 per cent increase for the MSCI World index. The fund’s net asset value increased by 15.6 per cent during the period.
The trust’s chairman, Julian Cazalet, said the valuation of the trust’s largest holding, Lindsell Train Limited (LTL), which has £16.1bn of assets under management, had increased by 23.4 per cent over the period and was a major contributor to performance. The holding represents 45 per cent of net assets in the trust.
He said: "Since the end of September global stock markets and LTL’s portfolios have fallen in value. If sustained, this will have an impact on LTL's valuation from the end of November and, due to LTL's high weighting within the company's portfolio, on the company’s net asset value.
"If this malign trend continues it will have an inevitable effect on LTL's profitability and, in time, on its dividend."
Nick Train, the trust’s investment manager, said activity in the trust’s portfolio had been minimal over the period, although some of its holdings appeared to have higher valuations.
He said: "Another period has passed without us doing anything substantive for the portfolio.
"We're not certain what the correct ratings should be for Diageo or PayPal or RELX today, but we do think that each has an unquantifiable but material growth opportunity ahead of it that justifies us hanging on to their shares and not paying too much mind to the valuations, within reason.
"Hanging on to winners and certainly not selling out of them for arbitrary reasons seems to us to give us the best shot at doing that."