Interactive Investor has placed the Lindsell Train Japanese Equity fund under formal review after lagging behind peers and its benchmark.
The ¥64.8bn (£415m) fund has returned 228.4% since manager Michael Lindsell (pictured) was appointed to run the mandate by Close Investments in January 2004 versus the Topix Index’s returns of 147.3%, according to its latest factsheet.
But recently performance has soured, with the fund losing investors 9.4% over the past 12 months compared to the average IA Japan fund, which is up 12.4%, data from FE Fundinfo shows. The Topix Index is higher than both at 24.9%.
This has begun seeping into its three-year performance numbers which is why II head of funds research Dzmitry Lipski said the team felt it was “prudent to take a closer look”.
“While this fund has outperformed over long time periods, it has significantly lagged its benchmark and peers over the shorter term,” Lipski said.
“Its underperformance is particularly notable since last November’s vaccine announcements, which proved to be the catalyst for value shares to outperform growth shares for a number of months. This proved to be a headwind for Lindsell Train Japanese Equity, as it invests in high-quality growth companies.”
As part of the formal review process II’s fund analysts will examine the team and the investment process, detractors for performance, current portfolio positioning and outlook for the fund. After this, the investment selection committee will decide to either retain or boot the fund from II’s Super 60 listing.
Like his business partner Nick Train, Lindsell invests in a concentrated portfolio of 20-30 high-quality companies with durable, cash-generative business franchises.
Train’s performance has also stumbled during the past year as many so-called growth stocks have fallen out of favour during the Covid economic recovery. His £8.5bn Global Equity fund was downgraded by Morningstar over the summer for falling behind other rivals, including Terry Smith’s Fundsmith Equity.
Lipski said the team hopes to make their decision within the next three months. “This gives us enough time to discuss our concern with the relevant fund manager and/or allow an opportunity for improvement.”
See also: Morningstar downgrades Nick Train’s £9bn global equity fund as it falls behind rivals
