Star-fund manager Nick Train has stopped questioning the future performance of his funds, claiming the move has made him a “better investor”.
Speaking at the Association of Investment Companies roundtable this afternoon (December 10), Mr Train said he did not know whether his funds would continue to underperform in 2020 but that he had “stopped asking these sort of questions”.
He said: “I don’t know [if the funds will underperform]. But I became a better investor once I stopped asking myself these sort of questions.”
Mr Train’s UK Equity fund was the absolute top performer in the IA UK All Companies Sector over the past three years, returning 46 per cent compared to a sector average of 20 per cent.
But the fund’s performance has weakened recently, returning 0.3 per cent over the past half year compared to its peers’ average of 3.5 per cent. Over the past three months, the fund is the absolute worst performer in its sector after losing 6.8 per cent. The Finsbury Growth & Income trust, which Mr Train also manages, has also seen weaker performance recently.
Mr Train backed his mandates, claiming “sometimes things have to underperform” and added if it was important for an investor to not own a vehicle that underperforms for a period then “maybe they should sell”.
Mr Train argued that merger and acquisition activity around the world, and the valuations they had placed on "high-quality" assets, suggested there was still “good value” in the stocks he owned.
The second biggest holding in the trust, the London Stock Exchange, was part of a failed transaction earlier this year in which the Hong Kong Stock Exchange attempted to take it over.
Mr Train said: “I’ve lost track of how many times [the LSE] has been bid for as a listed company.
“But the Hong Kong opening pitch was £83 per share. If we’re looking at the LSE at £68 per share, it suggests that there’s still some value in the security.”
Mr Train also owns football club Manchester United. Although Manchester United has not itself been part of any deals or mergers, its rival Manchester City was valued at $4.8bn (£3.7bn) when private equity firm Silver Lake paid $500m (£380m) for a 10 per cent stake.
By comparison Manchester United is currently valued at just under $3bn (£2.3bn). Mr Train believes the disparity between the two valuations show there is excess value to be realised in Manchester United as a holding.
He added: "We believe in the opportunity for profit in the convergence of digital tech, entertainment and sports rights and this creates firms of value.”
Mr Train said he took “comfort” that outstanding businesses would create wealth for patient investors as long as they were “prepared to hold them for long enough”.
imogen.tew@ft.com
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