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LF Lindsell Train UK Equity: May 2021 fund update

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 successful companies that have stood the test of time
  • He’s a long-term investor, and has made just one new investment over the past year
  • He's got a great long-term track record, boosted by his stock-picking ability, according to our analysis
  • The fund does not currently feature on the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The LF Lindsell Train UK Equity fund aims to deliver long-term growth by investing in high-quality UK companies that generate lots of cash and have stood the test of time. We think it could be a good option for the UK section of a broader global investment portfolio. A focus on large, high-quality companies means the fund could work well alongside other funds investing in unloved UK companies with recovery potential, or those focused on smaller companies.


The fund was set up in 2006 by Nick Train, who has more than three decades of investment experience. Train was previously Head of Global Equities at M&G Investment Management, where he worked since 1998. Before that he spent 17 years at GT Management in various senior roles including investment director and chief investment officer for Pan-Europe.

Alongside this fund, Train is co-manager of the Lindsell Train Global Equity fund and lead manager of two investment trusts. Given the high degree of coverage overlap between the four portfolios, and the fact they all use a similar investment process, we think this is a reasonable workload. Train also has the support of an experienced and highly regarded team, including Mike Lindsell.

Although we rate the manager highly, the fund isn’t on the Wealth Shortlist. It was previously on the Wealth 50 (available prior to the Wealth Shortlist), but we made the decision to remove it as the Lindsell Train business owns (including via this fund) a significant number of shares in Hargreaves Lansdown plc. This was done to avoid any potential conflict of interest.


Train invests mostly in large, longstanding businesses with characteristics that are hard to copy, such as strong brands, heritage or sports franchises. His search for high-quality businesses tends to lead him towards larger companies, although he has the freedom to invest in UK companies of any size if he spots an opportunity. This includes smaller companies, which are higher risk than their larger counterparts.

The manager sometimes invests large amounts in certain industries. Financial services companies, for example, account for over a quarter of the fund. Train thinks stock markets will rise over the long term, so he's invested in companies that stand to benefit including asset managers Schroders and Rathbone Brothers. Beverages, personal goods and media companies also form significant portions of the portfolio.

LF Lindsell Train UK Equity: sector allocation

Source: Lindsell Train Limited to 28/02/2021

The fund's largest holdings are household names – from Unilever and Diageo to Burberry Group and Heineken. They all make up a relatively large portion of the fund. In fact, the top 10 companies account for more than 80%. Some are close to 10% in size, which is as big as the rules allow. The fund currently invests in 27 companies overall. This gives each holding the potential to make a big difference to the fund’s performance, but it’s a higher-risk approach.

Train is the quintessential long-term investor, making very few changes to the fund. He’s made just one new investment over the past year – global credit bureau and data analytics business Experian.

The manager thinks it’s a world-class technology business. It has built a large database of unique customer credit data that is critical to the decision-making processes of its customers. It would be very difficult for new entrants to the market to compile similar data. New regulation would add to the difficulty, meaning the firm has significant barriers to entry from competition. The company is also transitioning from selling data, to selling data enhanced by decision tools, which increases the usefulness of the data to the firm’s customers. Train thinks the company’s transition to decision tools will drive substantial growth over the next decade.


Between them, Lindsell and Train own the majority of Lindsell Train Limited, the company that runs all Lindsell Train funds. We view this positively as ownership of the business ties the managers’ long-term incentives to the interests of investors. Our due diligence recently highlighted some areas for improvement in the firm’s corporate governance processes, which have already improved following our engagement.

The duo and their team spend all their time reading, learning and compiling information on companies they own shares in and those on their watch list. They’ve created a truly unique environment for staff, which includes a library within the office. They tend not to recruit experienced people, preferring to train and develop graduates who can be moulded into the Lindsell Train way of thinking.

The managers look for companies with the potential to thrive for decades, or even centuries, so it’s important they have high governance standards, and manage their environmental and social impacts well. Analysis of environmental, social and governance (ESG) factors is therefore a natural part of their investment process.

Their focus on high-quality companies means they don’t invest in industries that require large amounts of capital, such as energy, commodities and mining. They also avoid industries they think are detrimental to society and, as a result, potentially exposed to regulation or litigation, including tobacco, gambling and arms manufacturers.


The fund is available to HL clients for an ongoing annual fee of 0.50%, which is 0.15% lower than the standard ongoing charge of 0.65%. We think this is a reasonable price to access Train’s best UK-focused ideas. The HL platform fee of up to 0.45% per year also applies.


The fund has performed exceptionally over the long term. An investment of £10,000 made ten years ago would be worth £33,942*, while the broader UK stock market would have returned £18,959 over the same period. Our analysis puts this down to the manager’s ability to select outstanding companies, regardless of their size or the sector they’re in. Past performance should not be viewed as a guide to future returns. All funds will fall as well as rise in value so you could get back less than you invest.

The fund’s tended to perform broadly in line with the UK stock market when it’s rising, but its best periods of performance have usually been when markets have fallen, and the fund has held up better. That’s what happened in early 2020 when the stock market was hit by fears over the global pandemic.

One of the fund’s top performers over the past year was educational publisher Pearson, driven by greater demand for online learning resources as the Covid-19 pandemic confined people to their homes. France-based cognac, liqueur and spirit producer Remy Cointreau also did well as the company continued its recovery from a period of weaker sales and higher costs as a result of the pandemic.

The manager’s growth-focused investment style has led to strong returns throughout most of the last decade. But it hasn’t done as well as the market since the announcement of several Covid-19 vaccines in November 2020. A new wave of optimism has coursed through markets, and value-focused funds, which seek lowly-valued businesses, have so far come out on top. It’s tough to tell whether this is a flash in the pan, or the start of a longer period in the sun for value investing. As always though, we suggest investors build diversified portfolios with exposure to a variety of investment styles, sectors, countries and asset classes. Plus, you should regularly review your investments to make sure they continue to meet your needs and objectives.

Annual percentage growth
Apr 16 -
Apr 17
Apr 17 -
Apr 18
Apr 18 -
Apr 19
Apr 19 -
Apr 20
Apr 20 -
Apr 21
LF Lindsell Train UK Equity 20.6% 11.6% 15.6% -6.9% 16.5%
FTSE All-Share 20.1% 8.2% 2.6% -16.7% 25.9%

Past performance is not a guide to the future. Source: *Lipper IM to 30/04/2021.

LF Lindsell Train UK Equity factsheet, including charges

LF Lindsell Train UK Equity Key Investor Information

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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