Nick Train has admitted the absence of large tech names has affected his fund’s performance this year, but says he is not about to hold something he is not comfortable investing in.
Train is known for buying firms that own unique brands in the Lindsell Train Global Equity fund, including Unilever, Diageo, and Mondelez, but has avoided the FAAMG – Facebook, Apple, Amazon, Microsoft and Google – stocks that have propelled the US index year to date.
See also: Nick Train initiates stake in Experian as investors fret over ‘expensive’ stock
The Lindsell Train Global Equity Fund has delivered a year-to-date return of 6.5% compared with its benchmark, the MSCI World Index, which has delivered 9.5%. Its peer group, the IA Global sector, has returned 10.7%.
By contrast, the Nasdaq 100 index, which contains all the FAAMG stocks, has returned 38.7% year-to-date.
Information technology makes up 9.7% of Train’s portfolio while consumer staples accounts for 43.8%, according to the latest factsheet.
But Speaking to the Telegraph, Train said he wasn’t comfortable holding stocks in areas where he doesn’t have the competence to pick winners.
“In the end, we have to work within the context of the ideas and investment approach which we are comfortable with and have executed successfully in the past,” he said. “We don’t regard ourselves as having a competence in identifying winning new but potentially untested technologies.”
Rival fund Fundsmith Equity, which is often touted as an alternative to Lindsell Train Global Equity because of its quality growth approach, has pulled away this year, delivering 16.2%.
Smith’s fund counts Microsoft as its top holding and Facebook as its third largest position, although the factsheet does not divulge the individual weightings. Technology is the fund’s second largest sector weighting at 29.1%, marginally behind consumer staples at 29.5%.
Train said: “This year the handful of tech giants has continued to go up a great deal and some of our companies haven’t done much – that has left us scratching our heads.
“Until this year the companies we owned, which have all embraced technological changes, allowed us to participate in the tech boom at a distance and deliver really competitive returns.”
But Train pointed to tech stock Paypal, the portfolio’s ninth largest holding at 4.76%, as a saving grace. The digital payments firm’s stock price is up 70% year to date.
“Thank goodness we own PayPal in the global fund,” he said. “It has been an incredible investment. But has the valuation gone mad, or is it still a great investment opportunity? That is the debate that price moves have forced us to contemplate.”
Lindsell Train Global Equity versus Fundsmith Equity, sector and benchmarks
| Funds, sectors and benchmarks | YTD performance |
| Lindsell Train Global Equity B GBP | 6.48 |
| Fundsmith Equity T Acc | 16.22 |
| IA Global | 10.74 |
| MSCI World | 9.53 |
| Nasdaq 100 | 38.68 |
Source: FE Fundinfo
See also: Nick Train ‘cheered’ by Diageo deal to buy movie star’s craft gin company
