Writing in the commentary to the trust’s annual report for the year ending March 2014, Train warned: “If you are not worried about the impact of technology change on all your investments: you should be.”
Putting the view into practice, Train explained that the trust is invested in a number of companies “chosen for the participation they promise to the growth of Internet and digital media”.
But, he explained, the trust’s specific holdings were selected because they offer “durable brand or franchise characteristics, similar to those of our holdings in the consumer sectors”.
While admitting that the group’s results have been far from perfect Train did highlight the performance of eBay and Reed, but said Reed’s share price had had a “dull” year.
“Elsewhere, over time we have made money out of the investment in Pearson, but this share dropped 10% over our financial year, as other investors worry that the Internet, or strictly, the digitisation of education, is more of a threat than opportunity for it. As for Nintendo, although the shares gained 22% in local currency over the reporting period, there remains scepticism that it can engage a new generation of gamers,” he added.
On a more general note, Train said that while the fund has benefitted, for the last five or so years, from a “flight to quality” seen in the broader market that has meshed with its commitment to own only quality companies.
But, he said, while the trust is committed to this strategy, there will be times when “even great companies tread water” and, he noted that over the last year that some of the trust’s “quality” names have “stagnated or subsided, notably Diageo, down 10%, Heineken down 6% and Unilever down 8%”.
“This might hurt, in relative terms at least, but it is important shareholders understand that we have no intention of taking any mitigating action. We will stick with our "dependables" – unless their businesses cease to be so.”
For the year, the trust’s net asset value total return per share rose 13.1%.
