In the company's annual report, released last week (December 8), Nick Train, portfolio manager, said despite this, investment performance improved in the second part of the year.
“For the benefit of my ego and, I hope, to cheer up readers of this report, can I nonetheless note that my investment performance improved in the second half of your company’s financial year and outperformed – admittedly only by dint of falling less than the weak UK stock market,” he said.
“I sincerely hope this recent trend continues.”
Train said it has been “particularly frustrating” given that the business performance of most of the companies has met or exceeded his expectations.
“Sometimes this happens,” he said, adding that other investors’ attention is turned to different areas of the stock market, or they disagree about the prospects for certain companies.
This was most apparent in the shares of UK wealth management companies, he said, highlighting Hargreaves Lansdown and Schroders as suffering a “miserable” year in terms of share prices, even though the businesses have grown.
“I can only hope investor sentiment will improve towards the UK wealth management industry and, indeed, for the whole UK stock market.”
Train said better performance in the second half of the year was mainly due to a shift in investor preference away from younger tech companies, he added.
The trust does hold technology companies, for instance Experian, London Stock Exchange and RELX, but these are “very different” businesses, Train said, coming from lower valuations than the “latest generation of Nasdaq tech darlings”, so their share prices have not been hit as hard in recent months.
Train noted that LSE shares were up 10 per cent over the past year.
“I have forborne from discussing macro-economic conditions in this report, though it is evident investors are currently thinking about little else,” Train said.
“My reluctance to opine, is primarily because I know that we, and I don’t believe anyone else, can really know what is in store.”
However, Train said the two things he does know is that the portfolio is invested in substantive companies which have survived and “thrived” through similarly challenging episodes in the past.
“Second, all investors, indeed most people on the planet, must earnestly hope this wretched war in Ukraine ends soon.
“I ask you to conceive the boost to consumer confidence and government finances that would result from peace breaking out and the likely reaction of stock markets around the world.”