Lindsell Train  

Lindsell encouraged by trust holdings' improved performance

Lindsell encouraged by trust holdings' improved performance

Michael Lindsell said he is encouraged by the performance of a number of Lindsell Train Investment Trust's holdings, after the trust stumbled against its benchmark over the past year.

In a monthly report for the £252m Lindsell Train Investment Trust, Lindsell said the trust had suffered from a fall in Lindsell Train Limited's valuation, which accounts for 47 per cent of the trust’s net assets, as well as struggled against “a market led by technology and cyclical companies”.

But recent updates showed improved business performance from a number of other holdings, which Lindsell believes will translate into higher share prices soon.

The trust’s total return for the six months to September 30 was 5.9 per cent, lagging behind the firm’s benchmark, the MSCI World index, which saw a 10.2 per cent rise.

The trust's share price total return was -11.1 per cent for the month of November, compared with the 1.3 per cent return of its benchmark. The trust is currently trading at a 9.62 per cent premium.

Lindsell said: "The Trust’s quoted holdings have struggled against a market led by technology and cyclical companies. Frustratingly the Trust’s sole ‘pure’ technology company, PayPal, that performed spectacularly in 2020 and early 2021, has faltered lately as some of the extraordinary demand for online payments in lockdown has begun to dissipate.

"However, we are encouraged by recent updates of improved business performance from a number of our other holdings: Diageo has noted the welcome reopening of bars and clubs, adding to the continued strong demand for premium spirits at home; AG Barr upgraded its expected sales and profits for the full year; Nintendo reported strong recent sales of its Switch console and of its newly released Pokémon games; and RELX continues to grow its business around its data, legal and scientific content assets.

"So far, only the share prices of Diageo and RELX have acknowledged these more positive readings, with year-to-date performances of 35 per cent and 34 per cent respectively; but we believe there is every chance that the other companies’ prices will respond in due course."

Last month, Lindsell Train Limited’s co-founder Nick Train said he was not complacent about the future of his fund management firm as he acknowledged it could be facing its worst period of performance in 20 years.

All of the funds managed by Train, whose style is to focus on resilient, high quality businesses often at the expense of tech firms, have seen bottom quartile returns over the past year.

Lindsell said: "Should FUM at LTL continue to fall, this of course provides a difficult ongoing background although it is worth bearing in mind that a good part of LTL’s total returns in any year comes in dividends paid semi-annually in June and December, which at least means that next month’s return will receive a fillip."

sally.hickey@ft.com