Hargreaves Lansdown drags on FGIT performance

As Nick Train’s trust hugged its FTSE All-Share benchmark during H1

Finsbury Growth & Income Trust (FGIT) was unable to separate itself from its benchmark, the FTSE All-Share, during the six months to 31 March, with portfolio manager Nick Train (pictured) citing a “difficult few years” for UK asset managers.

FGIT’s net asset value per share hit £9.42 at the end of March, up 11% from 30 September 2022, but Train said the portfolio had been affected by the underperformance of its asset manager holdings.

Hargreaves Lansdown, which occupies 3.1% of the trust’s portfolio, weighed on the trust’s performance after its share price fell 6% during the period. This came despite its platform reaching record client numbers.

Train also noted that Schroders’ shares were “very lowly valued” by historic standards, though the UK asset manager’s share price did grow 22% over the six months, and Train said the firm was busy building and acquiring new investment capabilities that should keep it relevant for both institutional and private clients.

He added: “The growth in assets in Schroder’s private wealth and private equity divisions through 2022, a difficult year for markets, is encouraging for investors in the parent.”

In all, the trust’s share price grew 12.5% over the period, from £8 to £9, in line with the FTSE All-Share, which returned 12.3% for the half.

Despite the tricky period for asset managers, Train said the trust’s basic economic assumption was that things would “keep gradually getting better”, adding that the fruits of that economic growth would be spent by consumers on products and services that improve their quality of life.

The share prices of RLEX and Burberry, the largest and fourth-largest holdings in the portfolio, hit all-time highs during the half, and Train also highlighted strong performances from Fever-Tree and Heineken. “Wealthier consumers are drinking less, but better,” he said, also pointing out the record sales of Diageo’s premium and super-premium brands.

Aside from Diageo, which experienced a 4% fall in share price despite the strong premium sales figures, the aforementioned companies provided a tailwind to NAV, and the trust’s net assets neared £2bn, up from £1.83bn on 30 September 2022.

In the 10 years to 31 March 2023, FGIT’s share price has grown 139% to the benchmark’s 76%.

As NAV growth outpaced that of its share price during the half, the trust’s discount is tightening; Chairman Simon Haynes said the trust is committed to buying back shares when its discount exceeds 5%, and more than 7.6 million shares were repurchased at a cost of £67.4m during the period.

The discount was 4.4% at half’s end, and it sat at around 4% as of 11 May.

The trust made a £217m return after tax, compared to a loss of nearly £47m in the same period last year.

See also: Absolute return funds are having a resurgence

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