Fund manager Nick Train has said some of the Finsbury Growth & Income trust's recent underperformance has been down to profit taking in relation to the fund's biggest single holding.
Speaking at the Frostrow Investment Seminar, Train said London Stock Exchange Group - which accounts for 10 per cent of the £2bn trust - had suffered because of a spate of profit taking during the first half of 2021.
Train said this had been "painful" for the Finsbury Growth & Income trust, which has gained 3 per cent over the past 12 months while its sector, the AIC UK Equity Income, has gained 13.9 per cent.
LSEG's share price hit an all time high in February after its acquisition of Refinitiv. But Train highlighted how this turned into a "bout of profit taking" as investors sold their shares to take advantage of the increased value - which prompted the company's shares to fall by 24 per cent since March.
He said: “That [drop] has been painful both in absolute and relative terms.”
Train added LSEG remained an “important holding” within Finsbury, and said it had become an important company within the context of the UK stock market in general.
“We still believe the new LSE Group will be a formidably profitable, growing and increasingly valuable business,” he said.
Over the past five years, the trust has outperformed its sector, returning 66 per cent compared to 45.6 per cent for its sector.
Lindsell Train, co-founded by Train, this morning (June 4) announced it had waived half of its £5.3m performance fee for the Lindsell Train Investment Trust for the past year.
The performance fee for the year to March 31, 2021 will instead amount to £2.6m as part of a move which will see the trust switch its benchmark to the MSCI World index.
Train collected a £15.5m dividend from the fund house for the year to January 2020.
Companies House filings showed Lindsell Train Limited — the asset management company Train founded in 2000 with Mike Lindsell — paid a total dividend to shareholders for the financial year ending January 2020 of £43.1m, compared with £29.2m in the previous year.
Train and his business partner Lindsell each own 36 per cent of the business, meaning the pair split a £31m dividend.
sally.hickey@ft.com
