Interactive Investor

Nick Train and Michael Lindsell commit to seven more years managing money

21st June 2022 13:13

Sam Benstead from interactive investor

The Lindsell Train founders are putting succession plans in place but not leaving anytime soon.

Investment veterans Nick Train and Michael Lindsell have pledged to run portfolios for at least another seven years.

Aged 63 and 62, they manage together Lindsell Train Global Equity and the Lindsell Train Investment Trust. Train also manages Lindsell Train UK Equity and its sister trust Finsbury Growth & Income, while Lindsell also manages Lindsell Train Japanese Equity. They founded investment firm Lindsell Train Limited in 2000.

Writing in the Lindsell Train Investment Trust’s annual reports, chair Julian Cazalet said: “Lindsell Train Limited has for some years been taking steps to improve the durability of its business and is implementing some important initiatives, with particular focus on succession.

“Both Nick Train and Michael Lindsell plan to continue to be actively involved in portfolio management and running the business for at least another seven years, but since 2010 have built up a strong pool of investment talent.”

There are now five additional members of the investment team, including a portfolio manager and two deputy portfolio managers.

James Bullock manages the newly launched Lindsell Train North American Equity fund, the first strategy not run by Train or Lindsell.

Michael Lim, a director of Lindsell Train with 21 years at the firm, is passing on his chief operating officer responsibilities to Joss Saunders, who joined the company in May 2021.

Cazalet adds: “All are progressing well and taking on more responsibility. Within operations and marketing, a similar line-up of talent is in place to assume additional responsibilities as long-standing employees lessen their involvement.”

The firm has been recruiting to bolster all aspects of its business with the result that its employees now number 25, up from 19 at this time last year, according to Cazalet.

In the year to 31 March 2022, Lindsell Train Investment Trust showed a net asset value (NAV) decline of 2.3% versus a rise of 15.4% for its benchmark, the MSCI World Index. The trust’s share price return fell further, down 20%. This was due to its high premium of 20% falling to a discount of 0.8% over the 12-month period.

A lack of exposure to “big tech”, as well as the energy and financial sectors, and a valuation cut for the investment trust’s fund management firm, were the key factors behind Lindsell Train’s investment trust’s notable underperformance over its latest financial year.

Train said he was “displeased” with how the trust had performed over the one-year period. He notes that the business performance of the companies held is more promising than the market is giving them credit for.

He said: “Our investment approach is based on owning durable and predictable companies, while avoiding the speculative and cyclical ones – which often do offer rapid growth, at least for a period.

“The idea is that steady dependability is rarely highly valued, because investors are, as a generalisation, too busy trying to identify the next Tesla or trying to time the next gyration of the economic cycle.

“As a result – so our argument and historic track record asserts – you can be well-rewarded over time for holding what others regard as boring. We hope this remains the case.”

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