- Nick Train is the consummate long-term investor
- He recently purchased shares in football club Manchester United: the fund’s first new investment in two years
- We like the manager’s straightforward approach to investing and the fund retains its place on our Wealth 150+
Investing needn’t be complicated. In its simplest form, it's about identifying great companies and holding shares in those companies for the long term.
That's exactly what Nick Train, manager of the Lindsell Train UK Equity Fund, aims to do. He scours the market for companies with strong brands or a unique market position: attributes which should allow them to endure for decades, or even centuries.
Few companies meet the manager’s strict criteria and the fund currently comprises shares in just 26 companies. This concentrated approach increases risk and can cause returns to differ significantly from the broader UK stock market. That said, we expect this approach will deliver strong returns for investors with a long-term view.
We believe Nick Train is one of the best stock pickers investing in the UK stock market and view the fund as an excellent way to gain exposure to his best ideas. The fund retains its place on the Wealth 150+ list of our favourite funds in the major sectors with low charges.
How is the fund positioned?
Nick Train’s 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 has positioned the fund to benefit from a number of themes that he expects to come to fruition in the coming years.
Theme 1: Brands
According to Nick Train, demand for consumer brands will remain robust over the long term, supported by a rising global population and strong demand in emerging markets, where household incomes are rising rapidly. The UK is home to a number of global consumer-focused companies that could benefit from this and many of them feature in the portfolio. Unilever and Diageo, for example, own hundreds of brands between them, which they sell around the world. The manager believes these are exceptional companies, both by UK and global standards.
Theme 2: Financials
Nick Train believes stock markets will rise over the long term and a number of UK financial services businesses stand to benefit. 27.1% of the portfolio is currently invested in financials, with Schroders, London Stock Exchange and Hargreaves Lansdown all featuring among the fund’s top ten investments. Please note, we do not offer a view on the prospects for Hargreaves Lansdown plc.
Theme 3: Technology
The manager aims to benefit from 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 companies such as Daily Mail & General Trust, which owns the lucrative MailOnline news service.
A new investment: Manchester United plc
In Nick Train’s view, technology is challenging the traditional media industry, with online services such as Netflix and Facebook prepared to pay vast sums for video content that will attract a large audience. He believes it is a matter of time before internet giants bid against current football rights holders.
He therefore bought shares in football club Manchester United, a company he believes could be a beneficiary if competition for broadcasting rights intensifies. The company also benefits from a brand recognised the world over.
The fund has performed exceptionally over the long term. An investment of £10,000 made ten years ago would be worth £36,830*, while the broader UK stock market would have returned £19,014 over the same period. Of course, past performance should not be viewed as a guide to future returns.
The fund also outperformed the UK stock market over the past year. Our analysis attributes this to the manager’s ability to select companies with outstanding prospects, regardless of what sector they are in.
That said, it wasn’t all plain sailing for the fund. An investment in pub and hotel operator Greene King, for example, fell 20% following the release of a profit warning. The company was affected by a fall in consumer spending and its 2015 acquisition of pub owner Spirit compounded the problem. The manager believes many of the company’s issues are temporary and he retains his investment.
|Annual percentage growth|
| Feb 2013 -
| Feb 2014 -
| Feb 2015 -
| Feb 2016 -
| Feb 2017 -
|Lindsell Train UK Equity||20.0%||14.7%||2.1%||18.4%||11.0%|
Past performance is not a guide to the future. Source: Lipper IM to 28/02/2018.
*Source for £10,000 reference: Lipper IM to 28/02/2018.
Please note the fund currently has a holding in Hargreaves Lansdown PLC