Investments  

Train sets target for trust fee cut

Train sets target for trust fee cut

Nick Train has agreed to cut his management fee on the Finsbury Growth and Income trust he runs if it grows in size to £2bn.

The information was contained in the annual results statement of the trust, released to the stock exchange yesterday (December 17).

In the statement the board of the trust confirmed that the current fee payable to Lindsell Train is 0.15 per cent on the first £1bn of market capitalisation, with this falling to 0.135 per cent on any amount over £1bn.

But according to the statement Mr Train had also agreed in July to cut the fee on any amount over £2bn, excluding debt, to 0.12 per cent.

The Finsbury Growth and Income trust has a market capitalisation of £1.87bn as at December 18, after raising £225m of new capital from investors in the 2019 calendar year to date.

He said over the course of the next year he intends to raise an additional £550m. 

Over the year to December 18 the trust returned 21 per cent, compared with 18 per cent for the sector average.

An investor who had placed £1,000 in the trust a decade ago would now have £4,747 - if they had placed the same £1,000 in a UK equity tracker fund, they would have £2,210. 

In his commentary on the trust, Mr Tain said his performance was aided by being “perfectly positioned” for the uncertainty of Brexit.

This was because the trust had substantial investments in companies that derive most of their income from outside the UK, and so would be less exposed to the performance of the UK economy.

But Mr Train said this positioning was an accident.

He said: “FGT’s portfolio was not positioned in this way because of any brilliant analysis by Lindsell Train Limited and certainly not brilliant analysis by me, about the market ramifications of UK economic and political uncertainty in 2019.

"Rather, the portfolio is structured as it is because it reflects our long-held views about where the best long term investment returns will be earned. In other words there was a healthy dose of good fortune helping us in 2019." 

He added: "What is clear is that FGT’s short term performance has become increasingly sensitive to the swings in sentiment about UK politics.

"Any development perceived as helpful for the pound and the domestic economy has become, temporarily at least, unhelpful.

"Because when the pound goes up our overseas earners go sideways or down and the domestic businesses to which we have less exposure go up.

"Indeed, this is exactly what happened in September 2019, the last month of FGT’s financial year.

"But what I will assure shareholders is that we will not change the strategic positioning of your portfolio in response to such short-term fluctuations.

"Or putting it differently – we do not expect FGT’s medium-term performance to be effected either positively or negatively by whatever the eventual outcome of the UK’s Brexit travails."