The Lindsell Train trust has been bolstered by its investment in the fund house of the same name after the asset manager’s valuation jumped by nearly a quarter.
Half yearly results for the trust, published today (December 1), show its net asset value jumped 21 per cent in the six months to September, while its share price return increased by 13 per cent.
According to chairman Julian Cazalet, the most significant contribution to the trust’s success was its backing of the Lindsell Train fund house, which accounts for nearly half of the trust’s assets.
The value of Lindsell Train jumped 24.5 per cent in the six months to September, up from its low point at the start of the coronavirus crisis.
Mr Cazalet said this reflected Lindsell Train’s growth in funds under management, primarily due to positive market movements alongside net inflows.
In March, the company had written down the value of its funds business when the pandemic saw its assets dwindle by £4.5bn.
Latest inflows came primarily from US investors, who pumped more than £300m into the Delaware-based Global Equity fund, while the firm’s Japanese strategy also grew by 30 per cent.
Mr Cazalet added: “Lindsell Train’s long term performance remains competitive even though over the last six months other equity investors – particularly those with high weightings in technology companies – will have done better.”
World stock markets recovered strongly over the six months to September, after dropping dramatically in March as the full extent of the coronavirus crisis came to light.
The Lindsell Train investment trust struggled to keep up with markets in this time period, with the MSCI World Index up 24 per cent in sterling terms compared to the trust’s 21 per cent.
According to Nick Train, manager of the trust and co-founder of Lindsell Train, the worst fallers in the trust’s portfolio were drinks companies Laurent Perrier and Heineken, down 5 and 4 per cent respectively.
But the trust’s winners, including the Finsbury Growth and Income trust, PayPal, the London Stock Exchange, Nintendo and Unilever, saw double digit growth over the six month period.
Mr Train said: “Clearly, those companies with a digital growth story that can demonstrate that the pandemic has positively acted as an accelerant for their business have done best.
“Covid has actually helped PayPal and Nintendo. We have been fortunate that investors perceive our biggest direct equity holding, the LSE, as belonging to this favoured category.”
He added that it was an “unpleasant” surprise that the trust’s beverage companies had not been able to grow in 2020, or to protect short-term stock market value, despite being considered “defensive” stocks.
Mr Train said he had incorrectly expected this to be the same amid the recent market crashes.
Looking forward, the challenge for equity investors was deciphering if they had enough exposure to the “bull market stocks” of the pandemic, the “digital winners”.