The Lindsell Train Investment trust suffered a 3.6% fall in net asset value in the six months to the end of September, according to its half-year results, following a challenging year for investment trusts and the struggle of its top holding and parent company, Lindsell Train Limited.
The share price total return also fell 11.3% in this period. In comparison, the MSCI World index, in sterling terms, was up 4.5% on a total return basis.
Chair Julian Cazalet said the largest contributors to these figures were the holding in Lindsell Train Limited, making up 38.6% of the trust’s net asset value, and the lack of holdings in the ‘magnificent seven’ which carried the index through the year. Lindsell Train Limited’s valuation dropped 11.9% in those six months and lost £2.2bn in funds under management, down to £16.4bn.
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“All of LTL’s strategies have underperformed over the last three years, which was as much a consequence of its consistent approach to investment as of any isolated investment misjudgments,” Cazalet said.
“LTL portfolios exhibit a bias towards consumer franchises where share prices have fallen or stagnated recently and all have a limited number of investments in technology and no exposure to energy and leveraged financials, which are the areas that have driven the performance of LTL’s funds’ benchmarks in recent years.
“Both causes are related, as LTL’s funds also have minimal investments in these leading index performers, which in turn has contributed to their underperformance.”
Cazalet also noted that after eight years as chair, it would be his last statement as he leaves the board at the end of the year.
Investment Manager Nick Train reviewed some of the top holdings within the trust, including AG Barr, Diageo, and Heineken, arguing that while the portfolios are underperforming, they are becoming “better value”.
“Notwithstanding share price performance, we are happy with the companies we are invested in. And this is the case,” Train said.
“When I review the portfolio of direct holdings, which are all also held across other LTL accounts (except for Laurent-Perrier), I recognise that it is not perfect and that some of the companies are dealing with issues that have slowed their long-term growth rates. But no portfolio is ever perfect, and every company will face such issues at some stage in its history.”
