Nick Train has told Finsbury Growth & Income shareholders that he can barely remember a time in his 40-year career with so many investment opportunities about.
The Finsbury Growth & Income trust rose 4.7% in December, according to its latest monthly factsheet, exactly in line with the FTSE All Share.
Train used his final monthly update from 2021, to reflect on the outlook for the year ahead, stating: “I can barely remember a time in my 40-year career when there have been so many opportunities, especially in the deeply unloved UK equity market – where there are compelling growth stories on much lower valuations than global peers.”
He added: “Perhaps the most important part of the argument above is my contention that the UK Equity market can give exposure to those ‘global mega-trends’ and can do so from valuations that are demonstrably lower than for global peers. Note, we are not saying that the whole of the UK equity market is necessarily undervalued – though it may be.
“Instead, that it is possible to invest in UK companies with credible, long-term growth opportunities and that the valuations of such companies may have been penalised in recent years by global asset allocators’ disenchantment with all sterling equity assets. In fact, looking at your portfolio, I would argue that as 2021 progressed, investors began to acknowledge the calibre of some of the UK’s best secular growth companies and reward them with better share price performance – after, in some cases, years in the doldrums. So, for instance, the two biggest holdings in the portfolio, Diageo and Relx, ended up with very satisfactory share price returns, up 43% and 37% respectively for the full year.”
He singled out Rathbones as an attractive play on the UK.
“If the backdrop for investing in UK equities is attractive, then we maintain it is also attractive to invest in UK wealth management franchises, that can help UK savers take advantage of the wealth being created around the world, including the UK,” he said, adding: “To demonstrate that this aspiration is not just wishful thinking, consider the share price performance of Rathbones in 2021, by common consent a very high-quality private wealth manager, whose shares were up 34%.”
But not all his wealth management plays performed well in 2021. Hargreaves Lansdown was down 8% and while Schroders was up 10% it still lagged markets.
Train said: “This was disappointing, given the strategic progress and business growth both HL and Schroders were able to report in 2021. New customer acquisition at HL remained strong and Schroders was able to announce several strategically consistent and earnings-accretive acquisitions toward the end of the year.”