Nick Train has highlighted stellar returns from Rathbones as he spots an opportunity for investment industry stocks due to the coronavirus-driven boom for the savings ratio.
In the latest Finsbury Growth & Income monthly update, Train (pictured) highlighted that Rathbones had been the largest absolute gainer over July rising 14%.
The Lindsell Train fund manager also listed Hargreaves Lansdown among a handful of stocks that were up over 5% during the month, alongside Sage, Remy Cointreau, Unilever and Fevertree.
In contrast, pub chain Fullers was down 23% and Burberry shares were down over 20%, he said. The latter relies on “tourism, buzzing cities and consumer confidence”. “All in short supply – at least for now,” he said.
But the investment industry faces a different fortune, he added.
“On the flip side of that coin, we have seen analysis that points to a sharp uptick in the savings ratio in the UK, as consumers cut back on travel and out of home entertainment and instead save more of their income against what might turn out to be rainier days to come.
“It may be that what is bad for consumer spending may benefit those companies we own which are exposed to an increased propensity to consumer saving – Hargreaves, Rathbones and Schroders.”
The Office for Budget Responsibility has predicted that the savings ratio jumped to 30% during the height of the lockdown compared to 5% in February.
Both Schroders and Hargreaves Lansdown sit in the Finsbury Growth and Income trust’s top-10 representing 7.6% and 7.4% respectively.
Hargreaves Lansdown profits jumped 24% over the last year, according to its full-year results published in August, despite the Woodford Equity Income suspension tarnishing the platform’s reputation. It also topped the league table for platform net flows in Q2, bringing in an estimated £3.3bn, according to Fundscape.
See also: Nick Train defends Hargreaves Lansdown as pessimists play up Vanguard threat
