Michael Lindsell and Nick Train will remain at the helm of their fund boutique and continue to manage money for at least another seven years, according to the annual results for the Lindsell Train Investment Trust (LTIT).
Julian Cazalet, chair of LTIT, said the pair have given their “verbal assurance” they remain committed to the business in the near term, at a time when it faces one of its toughest periods for performance.
Founded by Train (pictured) and Lindsell in 2000, Lindsell Train Limited is the £222.7m trust’s largest single holding, accounting for 43.5% of net assets, meaning its fortunes have a huge bearing on the investment company.
Cazalet said, in recent years, LTL has been improving the “durability of its business”, with a focus on succession planning.
Train, 62, and Lindsell, 60, have recruited five additional members to the investment team, he noted, including a portfolio manager and two deputy portfolio managers who are all “progressing well and taking on more responsibility”.
Similar succession plans are being implemented on the management side, Cazalet added, with long-time company director Michael Lim passing on his COO duties to Joss Saunders, who joined last May.
“LTL has been recruiting to bolster all aspects of its business with the result that its employees now number 25, up from 19 at this time last year,” he said.
LTIT’s shares slump 20%
LTL has been one of the portfolio’s biggest winners, as the firm’s funds under management (FUM) have ballooned. But, recently, this has started to reverse as the pair’s quality growth strategies have fallen out of favour.
In the year to 31 March 2022, the value of the trust’s stake in LTL plunged 15% to £96.9m, down from £114.2m a year prior. This contributed to LTIT’s second year of underperformance, with net asset value declining 2.3% and the share price by 20%.
Its new benchmark, the MSCI World, was up 15.4% by comparison.
The revaluation was done using a “simpler” methodology adopted by the trust earlier this year, based on a sliding scale of percentage of FUM.
LTL’s FUM sank to £21.2bn at the end of January 2022, down 7% from £22.8bn in 2021. This was chiefly driven by £1.9bn worth of net redemptions, two thirds of which were from the Lindsell Train UK Equity fund.
But its funds still raked in £120m in management fees, a 10% improvement on the previous year, which lifted operating profit up 5% to £80.6m.
However, Cazalet cautioned LTIT shareholders that profit margins at Train and Lindsell’s eponymous boutique may fall from current levels as the group expands its profit share scheme to retain key employees.