Nick Train defended a lack of portfolio activity as the Lindsell Train Investment Trust posted improved annual results compared to previous years.
For the year ended 31 March 2023, the trust’s relative performance bounced back after two consecutive years of underperforming. Net asset value (NAV) total return dropped 0.4%, while its MSCI World Index in Sterling fell 1%. Chair Julian Cazalet said it was “pleasing to see” an improvement in comparative returns.
In the trust’s 2022 financial year, net asset value declined 2.3% while the MSCI World was up 15.4%.
Despite the marginal outperformance, net asset value per share fell 5%, while the trust’s discount ended the financial year at 0.4%.
The trust’s main holding, Lindsell Train Limited (LTL), makes up 40.3% of NAV. While Cazalet noted that the holding had been a drag on performance in recent years, LTL performed better than the average position in the trust, posting a valuation total return was 0.2% over the period. However, total return for the year to the end of March was down 14% from the firm’s peak valuation in June 2021.
However, LTL’s funds under management has fallen to £18.6bn from its £24.6bn in June 2021.
The trust announced a final dividend of £51.50 per ordinary share, marginally up from the £51.12 paid out in 2022.
Lack of activity reflects Nick Train’s convictions
In terms of positioning, the trust didn’t initiate or sell any holdings over the second half of the year.
Portfolio manager Train said the only activity during the period was to add to its most recent position in drinks company, Laurent-Perrier, which now makes up 2% of the trust’s portfolio. He added that the trust will look to build this position further in the future as and when shares become available.
Train said: “The lack of portfolio activity reflects our double conviction. First, that the companies we own are fine businesses with plenty of growth ahead of them and, therefore, with the potential to command higher (we hope much higher) share prices in the future.
“Second, we reiterate our view that buying and selling shares in the hope of improving investment performance is, on balance and for most investors, over time, a loser’s game. The costs of such selling and buying are certain, while the benefits of switching horses in mid-stream are most uncertain, particularly when you own a stable of thoroughbreds, which we believe is the case for ours.”
The trust’s long-term performance remains solid, with an annualised return of 13.4% since launch in 2001. In comparison, its benchmark has returned an annualised 6.5% over the same period.