Nick Train anticipates period of poor performance for his trust

No surprise if such a highly concentrated portfolio hits the skids ‘at some point’

Nick Train has admitted it would not be surprising if his highly concentrated Finsbury Growth & Income Trust suffers a period of poor performance “at some point”.

Train said in his latest monthly update for the trust he was “pleasantly surprised” by the “modest uplift” in performance as the share price returned 1.1% as the FTSE All-Share sank 3%.

Looking through the top contributors to performance in May he said it was “notable” that four out of five were “what others call ‘defensive’ holdings” that he has big positions in. “We prefer to think of them as secular growth companies, but such semantics are probably irrelevant for this note,” he said.

He said it was not surprising that all five stocks – Relx, Unilever, Mondelez, Diageo and London Stock Exchange – are also some of his biggest holdings, collectively making up 48% of the portfolio.

“It is hard to avoid the conclusion, therefore, that our highly concentrated portfolio comprises a number of big positions that have done very well recently, and indeed over the longer term too. And while we remain optimistic about the business prospects and long-term share price potential in these holdings, it is also true that we have not been adding much to them of late.

“We love to outperform for shareholders but have to state the obvious: it would not at all be a surprise if such a highly concentrated portfolio that had performed well embarked on a period of poor performance at some point.”

The May update did not mention Hargreaves Lansdown which has seen its share price stutter this month after taking a reputational hit from its endorsement of stricken manager Neil Woodford.

Last week Hargreaves shares dived 13% to around £19 a share, which saw Train’s eponymous investment boutique lose £150m.

The D2c firm is the fourth largest position in his FGT at 8.6% of the portfolio.

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