Fund Profile

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Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
Fund manager Nick Train ignores the benchmark entirely - investing in companies which he believes will perform well...
Overview

Finsbury Growth & Income is a highly-concentrated investment trust with a portfolio of mainly UK stocks, aiming to achieve capital and income growth in excess of that produced by the FTSE All-Share.

Fund manager Nick Train ignores the benchmark entirely - investing in companies which he believes will perform well regardless of their weighting in the index. The trust tends to invest in companies that have been resilient over various cycles and exhibit steady earnings growth over the long term.

He runs a highly-concentrated portfolio which stood at just 22 stocks when last reported in February, and Nick is renowned for his very long-term, low-turnover approach. For example, the most recent addition to the portfolio was Manchester United last summer, and he has only added one other new stock to the portfolio over the past four years. This, along with his focus on high-quality, cash-generative companies with strong franchises means his portfolio is highly differentiated to his peers in the AIC UK Equity Income sector.

Over the past five years (to the end of March) the trust has delivered an NAV return of 78.9%, beating the AIC UK Equity Income sector by 44.5%and more than doubling the returns of the FTSE All Share. The trust’s returns over the longer term have been equally as strong, with it having beaten the index in nine of the past ten calendar years.

The trust is known for trading at a slight premium to par, however, in recent times we have seen this gap narrow. At the time of writing the premium is just 0.2%, relative to the three year historical average of 0.6%.

Kepler View

Finsbury Growth & Income Trust has a highly-concentrated portfolio. While this brings with it greater stock specific risk, it is impressive that over the past ten years the trust has outperformed its index nine times, showing that there have always been more and bigger winners than losers. In our view, this is far from luck, and his ability to find hidden gems that will continue to grow over the long term is a skill few managers demonstrate.

Although the trust has one of the lowest yields in the sector at 1.9%, dividend growth rates are high relative to peers and the trust shies away from some of the most popular UK dividend-paying stocks, which often have the most challenged dividends. As such and given its strong track record of consistent capital growth, the trust can be used as a diversifier for those concerned about overall levels of concentration in the UK equity income market.

BULL

BEAR

Consistently delivering strong returns relative to the benchmark and sector
Vulnerable to rising rates
The unique and diversified portfolio offers very different exposure in comparison to the peer group
Trading at a premium
A world renowned, and valuation disciplined portfolio manager
Yield is unspectacular relative to its peers
Delivered the one of strongest dividend growth rates in the sector over five years (7.8%)

Continue to Portfolio
2022 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

05 Jan 2022 Kepler’s top-rated trusts for 2022
We unveil the winners of our ratings for 2022 in the Growth, Income & Growth and Alternative Income categories…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
06 Aug 2020 Recipe for disaster?
In this article, we assess whether the recent shift to concentrated portfolios has been beneficial or detrimental during corrections…
28 Aug 2019 Quality street: can the dominant style continue to outperform?
For several years, quality as an investing style has dominated, outperforming both value and growth. We examine why the case for quality remains strong and the importance of taking an active approach…
14 Aug 2019 Dangerous ground: the perils of timing the market
Our research shows that attempting to time the market is, more often than not, a mug's game...
15 Apr 2019 Fund Analysis
Fund manager Nick Train ignores the benchmark entirely - investing in companies which he believes will perform well...
27 Feb 2019 A marathon not a sprint
Our research shows that investment trusts' structural advantages give them a significant edge for investors seeking long term capital growth...
30 Jan 2019 The Growth Portfolio
Our ten investment trust picks for long-term capital growth...
24 Dec 2018 Why did the chicken cross the road?
Because he was so bored of reading newspapers devoted entirely to Brexit he was hoping he’d be hit by a truck.
07 Nov 2018 The Great British Buffett
New research claims to have identified the secret of Warren Buffett's success; we apply similar principles to find the UK's answer to The Sage of Omaha...
06 Nov 2018 Fund Analysis
A highly concentrated, high conviction and benchmark agnostic investment trust, run by Nick Train....
08 Aug 2018 Feeling giddy?
As valuations continue to soar, we consider a few equity trusts with different approaches to diversification and risk management...
09 Jul 2018 Fund Analysis
A highly idiosyncratic UK growth trust with a very concentrated portfolio and a low turnover stock picking approach...
09 Jul 2018 Go big or go home
The overwhelming evidence is that fund managers who are willing to back their convictions with punchy bets are the ones that tend to outperform by the highest margin...
20 Nov 2017 Thin ice
Our analysis shows the extent to which funds in the UK equity income sector are concentrated on just a few dividend paying stocks, revealing significant systemic risk…
20 Nov 2017 Fund Analysis
A differentiated UK income trust with a vigorous discount control mechanism that bears little resemblance to the index or its peers due the manager’s concentrated, stockpicking approach
12 Jul 2016 Fund Analysis
12 Jul 2016 The investment trust advantage
The UK's leading managers tell us how they use investment trusts to maximise returns...
12 Jul 2016 Taking the bull by the horns
We examine the boards which have done most to fight for their shareholders' interests in an unforgiving arena...
12 Jul 2016 Anarchy in the UK
We collate the reactions of the City's leading investment companies analysts in the wake of the EU referendum...
19 Apr 2016 Fund Analysis
05 Apr 2016 Fighting spirit
Why investment trusts are the ultimate recovery play...
13 Oct 2015 Masters of the universe
Five of the best stockpickers in the entire investment companies sector...
View all

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