Star fund manager Nick Train’s Finsbury Growth & Income Trust PLC (LSE:FGT) lost multiple millions from bets on investment stalwarts Schroders and Hargreaves Lansdown and consumer-focused punts such as Fevertree, Manchester United and Cazoo in the past year.
In what was its second consecutive year of underperformance of its benchmark, the investment trust’s net assets value (NAV) at its 30 September year end of £1.83bn were down from £2.065bn a year earlier, with NAV per share falling 7.6% to 848.4p after share buybacks during the year.
The NAV total return per share down 5.8% as a total dividend of 18.1p was declared.
With the shares down 8.7% to 800p over the 12 months and down almost 5% since the start of 2020, the shares stood at a discount of 5.7% to NAV.
Out of the 26 holdings in the portfolio, all but seven shrank in size during the year.
The biggest losses in the portfolio were blue-chip pair Schroders and Hargreaves, depreciating £59mln and £44mln, followed by Fevertree at £45mln.
Winners were led by Cadbury owner Mondelez at £26mln, followed by boozy drinks makers Diageo and Remy Cointreau, along with more staid RELX and LSE. Diageo, RELX and LSE at each over 10% of the total value are the fund's three main holdings.
“For the benefit of my ego and, I hope, to cheer up readers of this report, can I nonetheless note that my investment performance improved in the second half of your company’s financial year and outperformed – admittedly only by dint of falling less than the weak UK stock market,” said Train in the statement.
“I sincerely hope this recent trend continues.”
Since December last year, Train has acquired over 800,000 shares and currently holds 2.2% of the shares.
Train said the underperformance was "particularly frustrating, given that the business performance of most of the companies in the portfolio has met or exceeded my expectations. Sometimes this happens. Other investors’ attention is turned to different areas of the stock market, or they disagree with my enthusiasm about the prospects for certain companies – leaving our investments for you becalmed, or worse."
He said the investments in Schroders and HL were a case in point, as their shares had tumbled but their businesses grew in terms of customer numbers or assets under management.
As for tech companies and those that rely on technology, including Experian, HL, LSE, RELX and Sage, he said they are "very different businesses, coming from very different (lower) valuations than the latest generation of NASDAQ tech darlings".
Refraining from opining on the macroeconomic backdrop, Train said the portfolio is "largely invested in substantive companies which have survived and thrived through similarly challenging episodes in the past" and that investors should "conceive the boost to consumer confidence and government finances that would result from peace breaking out [in Ukraine] and the likely reaction of stock markets around the world".