Finsbury Growth & Income Trust manager Nick Train is confident on the prospects for UK plc moving forward following the recent wave of bids for FTSE companies.
In recent weeks, M&A activity has picked up in the UK, with firms such as Anglo American and Darktrace receiving offers. Train says this is evidence of the breadth of opportunity in the UK market.
“We continue to believe the long period of underperformance from the UK stockmarket has thrown up opportunities that we are keen to capture. In late April the two multi-billion pound bids – one for a UK listed mining company, Anglo American and the other for one of the UK’s rare technology companies, Darktrace – reinforce our sense that the UK market is pregnant with value and opportunity.
“We do not own Anglos or Darktrace and we don’t want any of our companies to be bid for at current valuations, but we do hope and expect [the] portfolio will participate in any improved confidence about London-listed equities.”
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In April, the trust’s net asset value was down 3.2%, trailing its index which was up 2.5%. In the trust’s April factsheet, Train attributed the performance to not owning oil and mining majors.
“Sometimes a portfolio just ‘clicks’ and gains are effortless. At other times it seems that all the breaks are running against you. Sadly, the latter is the case with [the] company’s portfolio currently.
“Putting it simplistically: we do not own oil and mining shares and they have been going up,” Train said. “We own meaningful positions in premium and luxury consumer brand owners (Burberry and Diageo) and they have been going down.
“And the data and software companies that make up the biggest proportion of the portfolio and have performed strongly of late, gave back some of their gains in April, falling in lockstep with US technology growth shares which were also weak.”
The trust currently trades at an 8.31% discount, according to the Association of Investment Companies.