Lindsell TrainMar 10 2022

Lindsell Train: 'Luck plays a role'

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Lindsell Train: 'Luck plays a role'

The manager of the Lindsell Train Global Equity fund has said luck will play a role in its short-term performance amid worldwide volatility.

James Bullock has said nothing is guaranteed when it came to the fund's performance, after it posted a loss of 1.9 per cent in February.

The fund’s manager used the example of gambling when discussing the fortunes for his fund.

“With each spin independent of the last, there is no cosmic righting mechanism to bring things back to order,” he said.

“So, whilst it's tempting to attribute a portion of our poor relative showing from 2021 to ill fortune, and to hope for a quick reversal, nothing is guaranteed.”

Bullock has managed the global equity portfolios alongside Nick Train and Michael Lindsell since 2015. He is also the portfolio manager for the North American Equity fund, which is not currently open for investment.

Given long enough the non-luck component will make the difference.James Bullock

He said while luck will always play a role in the future success of the fund, it needn’t define it.

“Given long enough…the non-luck component, the built-in competitive advantages we identify in our companies, will make the difference.”

Bullock said the global fund had shown “relative resilience” in the turbulent first few months of the year, posting a 6.1 per cent loss, in comparison to the MSCI World Index losing 6.8 per cent.

“But the world remains volatile, and things can quickly change,” Bullock added.

The fund’s return fell 1.9 per cent in the month to February 28, outperforming its index which fell 2.5 per cent against a backdrop of rate hikes, input cost inflation and acute geopolitical uncertainty.

Bullock said the fund saw big moves from Hargreaves Lansdown and Intuit, which fell 15 per cent and 14 per cent respectively, and Shisheido and WWE which rose 14 per cent and 18 per cent.

He said Hargreaves was hit as investors “took exception” to their £175mn investment spend and the two-year suspension of the special dividend as a result.

Intuit issued a “hearty update” to investors, he said, but with a slower than expected start to its tax season.

In turn, Japanese cosmetics company Shiseido saw a share price rise after they signalled improvement to their Chinese business, and WWE boasted “fantastic” engagement numbers.

The Lindsell Train Global Equity fund has stuttered recently, and last month was taken off Bestinvest’s list of favourite funds.

The fund has underperformed its index significantly in the three years to the end of February, posting a 6.1 per cent return compared to MSCI’s World Index seeing a 14.1 per cent return.

Nick Train said last month that he had no plans to radically change the constituents of the fund's portfolio.

"The future investment approach of your fund will be the same as its past," he said.

"Specifically, we will continue to place the highest investment value on our analysis of the durability of the businesses we choose to invest in."

sally.hickey@ft.com