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CF Lindsell Train UK Equity - a portfolio of exceptional companies

Kate Marshall | Wed 30 November 2016

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • Nick Train invests in globally-oriented businesses with unique market positions and dependable earnings
  • This has benefited long-term returns, although the fund has underperformed more recently
  • We remain confident in the manager’s investment approach and stock-picking skills
  • UK economic growth has only passing relevance for the performance of the UK stock market, according to Nick Train, manager of the CF Lindsell Train UK Equity Fund. Many businesses located in the UK are global in nature. This means they are not solely reliant on the fortunes of the domestic economy and have the ability to prosper even when times get tough.

    The rising prevalence of technology in our everyday lives, and the increase in wealth and consumption across developing markets, are two global themes with the power to create long-term wealth for investors, in the manager’s view. Nick Train aims to capitalise on the growing use of technology worldwide by investing in companies that own or create media content or software used on digital devices, such as smartphones and tablets. This includes publishing and education company Pearson and Daily Mail, owner of the website MailOnline.

    In the developed world Nick Train expects long-term demand for consumer brands to remain robust, supported by a rising global population. Yet these companies are also benefiting from consumption in emerging markets, where both populations and incomes are growing rapidly. Many consumer brands, such as Diageo, Heineken and Unilever, have dominant market positions in these regions and the manager believes these companies are well placed to capitalise.

    Performance

    Nick Train’s longstanding and disciplined investment approach has resulted in outstanding long-term returns for investors. Since launch in July 2006, the fund has grown 229.3%* compared with 80.5% for the FTSE All Share index. Our analysis suggests the manager’s superior stock selection has driven long-term returns, although past performance does not act as a guide to future returns.

    Annual Percentage Growth
    Nov 11 -
    Nov 12
    Nov 12 -
    Nov 13
    Nov 13 -
    Nov 14
    Nov 14 -
    Nov 15
    Nov 15 -
    Nov 16
    CF Lindsell Train UK Equity 19.7 33.0 6.0 16.7 13.9
    FTSE All-Share 13.9 21.2 0.2 3.9 11.6

    Source: *Lipper IM to 01/11/2016

    Past performance is not a guide to future returns.

    A focus on companies with dependable earnings and those perceived to have superior growth potential has benefited performance; this type of company has proven popular in recent years against a backdrop of economic uncertainty and low interest rates. More recently, investors have shunned these businesses in favour of some of the more undervalued and economically-sensitive areas of the market. The fund has therefore underperformed the broader UK market in recent months.

    Over the longer term we believe Nick Train has added value through picking stocks that have performed well regardless of which sector they are in. That said, this is a highly-concentrated portfolio investing in a narrow range of sectors and any fluctuation in the performance of these sectors will have some bearing on returns, which makes it a higher-risk approach. While we expect the fund to undergo periods of short-term underperformance, we believe the manager will continue to deliver for investors with a long-term view.

    Source: HL, correct at 31/10/2016

    Our view on this fund

    Nick Train has adopted an uncomplicated, but effective, investment approach. He invests in companies with strong brands and unique market positions, and holds them for the long term.

    Similar to the manager’s philosophy, we feel this fund could form part of a wider, long-term investment portfolio. With its investments in some of the UK’s most respected brands and a talented manager at the helm, we remain optimistic about its longer-term prospects, though there are of course no guarantees. We continue to hold Nick Train in high regard and the fund remains on the Wealth 150+ list of our favourite funds at the lowest ongoing charge. The Vantage charge of up to 0.45% p.a. also applies.

    Please note this fund has a holding in Hargreaves Lansdown.

    Find out more about this fund including how to invest

    Please read the key features/key investor information document in addition to the information above.

    Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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