Train benefits from soaring share prices of financial firms

Train benefits from soaring share prices of financial firms

Major share price gains for fund houses Rathbones and Schroders as well as fund platform Hargreaves Lansdown have boosted the returns of the £6.8bn Lindsell Train fund.

In his latest update to investors in the fund, published on 14 May, fund manager Nick Train said he has owned those stocks for a long time, and has added to them over the past year, a period when sentiment towards investment managers was negative due to turbulence in the markets.

The Lindsell Train UK Equity fund has returned 84 per cent over the past five years to 14 May, according to data from FE Analytics, compared with a gain of 27 per cent for the average fund in the IA UK All Companies sector in the same time period.

Mr Train’s various funds are the second largest shareholders in Hargreaves Lansdown, holding an investment of more than £1bn, and the largest non-family shareholder in Schroders.

Hargreaves shares fell from £22.70 in September 2018 to £16.40 at the end of January 2019. But the shares are now (14 May) worth £23.05p.

Rathbones shares fell to as low as £21.98 in February 2019, and are now worth more than £23.

Schroders shares meanwhile were £25 at the start of January 2019, and are presently above £30.

The fund manager told shareholders: "It is important to remind our investors that we do not trade our holdings in these fund management companies.

"We never buy them on the basis that we ‘fancy’ the market for the next few months and we certainly don’t sell because we are nervous in the short term as you know we rarely sell anything, ever.

"No – these investments have been made because we know that successful fund management companies are excellent long term investments."

He said this was in part because the business economics of a successful fund manager were attractive.

"Just look at the operating margins of the three we are invested in – all well over 20per cent or higher," he said.

He added: "In addition we invest in this industry because we are long term optimists about global stock markets and global wealth creation.

"Of course, economies and markets in particular, are volatile. But that volatility shouldn’t matter if the secular progression is up.

"In the meantime, the volatility unnerves some investors and periodically allows us to access the shares of sound fund management franchises at what we see as attractive valuations.

"That was certainly so last year as we added to the holdings in HL and Schroders in particular."

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