Nick Train has singled out Schroders as a key holding he is using to tap into the burgeoning private wealth space, an area he believes will take off and be of growing significance in the 21st century.
In his last Finsbury Growth & Income update of 2020, Train highlighted “stock market proxies” or “asset managers with growing private wealth businesses” as one of the key themes driving portfolio construction of his £2bn trust.
He singled out Schroders, which is the trust’s sixth largest holding at 7.6%, as being the biggest example of this trend.
In 2018 Schroders launched Schroders Personal Wealth as part of a joint venture with Lloyds, with the express aim of becoming one of the top three UK financial planning businesses in five years.
Since then, other fund houses have followed in its footsteps with M&G Investments launching a £28bn wealth management arm last September. On Wednesday, Fidelity International announced it was throwing its hat in the ring with its own private wealth proposition.
“We see the provision of private wealth advice as another service that has an opportunity to harness 21st century technology to improve customer experience and shareholder returns,” Train said.
Train said he views around 40% of his holdings, including Sage, Relx and Daily Mail & General Trust, as “digital winners,” while a further 35% of are classed as companies with “beloved and trusted consumer brands” like Diageo, Heineken and Mondelez.
Another 15.5% is held in companies with luxury good brands like Burberry and Remy Cointreau.
The balance is held in asset managers with growing private wealth propositions, he said.
Finsbury Growth & Income stumbles amid Covid vaccine rally
Train’s Finsbury Growth & Income trust struggled to outperform the FTSE All Share toward the end of the year as euphoria over the Covid vaccine breakthroughs sparked a value rotation.
In December the trust returned 2.7% on an NAV and share price basis, while the index was up 3.9%.
Though Train reiterated “the last 12 months have been as challenging as I can recall as a professional investor,” he added that the company’s NAV had remained resilient compared to steeper falls across the UK stock market.
“In a year like 2020 it is so important not to confuse short-term, one-off, difficulties with underlying and long-term strategic progress,” he said.
“We believe almost all the companies in your portfolio are more valuable today than they were at the start of 2020 (even if their share prices have not yet reflected that value). Either because they have proven themselves resilient during the most stressful circumstances or they have found new ways to create profitable value, often by exploiting digital technology.”
