In the trust’s results statement, submitted to the stock exchange this morning (December 5) Julian Cazalet said LTL has “suffered from more than two years of disappointing relative performance" across all of its four equity strategies.
The Lindsell Train Investment Trust owns a 24.2 per cent stake in Lindsell Train Limited, which accounted for 42.7 per cent of its net asset value at September 30 this year.
Cazalet said the LTL exposure had had the biggest bearing on the trust’s performance, after its net asset value fell 10.4 per cent and its funds under management dropped by nearly £2bn in the period.
This was driven by £1.5bn in redemptions and £400mn in falling market prices.
The strategy can fall out of favourJulian Cazalet, Lindsell Train“The experience of recent years illustrates the investment risk inherent in a fund management business that has a singular approach to investing,” he said.
Although LTL offers four equity strategies in different geographies, all its portfolios are run following a consistent approach and tend to invest in the same types of companies.
The company believes this approach will outperform in the long term, Cazalet said, given the investment manager’s focus on companies that should generate consistently higher returns on capital over time.
LTL and the company’s directors strongly believe that this approach will outperform in the long term, given the investment manager’s concentration on companies that should generate consistently higher returns on capital over time.
“However, the strategy can fall out of favour when it is seen to be generating inferior short-term returns compared with alternative strategies,” Cazalet added.
The Lindsell Train Investment Trust saw a share price total loss of 6.5 per cent per ordinary share, with a net asset value loss of 3 per cent in the six months to September 30.
This is compared with the MSCI World Index total return, which lost 7.3 per cent in the period.
Nick Train, investment manager of the trust, said: “The best is yet to come”, adding this attitude to life is both rational and psychologically therapeutic, especially for those facing the challenges of investment markets.
“I admit that threading through today’s macro-economic and geopolitical thickets I must work harder than usual to maintain my native optimism,” Train said.
The best really is still yet to comeNick Train, Lindsell Train “But when I turn to the prospects for the businesses we are invested in – they appear brighter and brighter.”
Train outlined a few “justifications” of the holdings in the trust.
This includes Nintendo, which Train said is the creator of some of the most “sought-after” content on the planet, including a 33 per cent ownership of Pokemon.
“Gaming is an immature industry; Nintendo’s content is beloved; new sales records for its games and devices are likely to be set for years to come,” Train said.
He also highlighted the trust’s investment in the London Stock Exchange Group, saying he was encouraged by the “chutzpah” of its chief executive Officer, David Schwimmer, who in July said he has advised on hundreds of transactions in his career, but could not think of a single one as transformational and value-creating as this one”.
The LSE acquired data provider Refinitiv in early 2021.
“We don’t own any companies where we don’t expect their future to be better than the past, however glorious,” said Train.
“The best really is still yet to come.”
sally.hickey@ft.com
