Lindsell Train

LTI offers access to Nick Train’s asset management company, and it is trading on a historically low premium…

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. 

Lindsell Train
2021 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler for income & growth... Find out more

Lindsell Train Investment Trust (LTI) is run by Nick Train, co-founder of the eminent UK asset manager Lindsell Train Limited, and the trust invests in global equities. Like many of Lindsell Train Limited’s strategies, LTI is characterised by its heavily concentrated portfolio of quality growth equities, with a mere 15 holdings currently. The majority of LTI’s portfolio can be split into two categories: technology and consumer franchises (with a smaller allocation to financials). However, the defining characteristic of LTI is its c. 48% exposure to the equity of its management company, offering public investors the only way to access the equity of the asset manager.

LTI has been able to generate a strong track record of outperformance, as we discuss in the Performance section. However, LTI has begun to lag behind its peers over the last 12 months, as high-growth stocks and low-quality cyclicals have outperformed, biases which are not present in LTI’s portfolio. There is a remarkable difference in the return profile of LTI’s NAV and share price, however, a result of the at times eyewatering premium LTI has traded on (see the Discount section). Although LTI currently trades on an 14.1% premium, it had previously traded above a 100% premium in 2019 as a result of the market’s demand for its holding of Lindsell Train Limited.

LTI also has a strong history of dividend growth, following a policy of paying out most of its underlying dividend as income. LTI grew its dividend 49% over the last financial year, with a five-year growth rate of 494%. LTI currently has a historical dividend yield of 3.2%.

Kepler View

We believe LTI offers investors a unique portfolio within the global equity space: a combination of high-conviction equity investing and the unlisted equity holding. This can bring with it diversification benefits, given the low overlap in holdings LTI will have to broader global equities, but it can also bring with it enhanced risks. There is a substantial amount of single-stock risk given LTI’s concentration, as well as a much higher degree of manager risk than a traditional listed equity portfolio would have.

LTI’s long-term return profile has been attractive, with the trust able to outperform both peers and global equities consistently until 2020. Unfortunately this trend of outperformance has begun to revert, as since the start of the pandemic LTI has been disadvantaged by the trend towards high-growth equities and low-quality recovery stocks which have driven markets.

Ultimately we believe LTI would work well in tandem with a core equity portfolio, offering both diversification and potentially enhanced returns, though we remind investors of the substantial idiosyncratic risks LTI carries. For ethically minded investors, we highlight that LTI will not invest in what are perceived to be unethical investments, e.g. tobacco, gambling and arms manufacturers.

Bull
Bear
The only way to invest in the equity of the asset manager Lindsell Train Limited
Has begun to underperform global equities thanks to value-led recovery
Nearly fivefold increase in dividends over the past five years
Enhanced manager and single-stock risks due to large holding in Lindsell Train Limited
Strong track record of long-term outperformance against peers and global equities
Highly volatile premium, due to the presence of its unlisted equity investment
David Johnson
David is an investment trust analyst and joined Kepler in September 2020. Prior to this he ran multi-asset model portfolios at a discretionary fund manager, and has worked in both asset management and investment banking during his career. He holds a Masters in Finance from the University of Warwick and is a CFA charterholder.

Fund History

Kepler Partners LLP considers this commentary to be a minor non-monetary benefit, as it:

1. Is intended to enhance the quality of service provided to you by us and is generic in nature;

2. Consists of short-term market commentary on the latest economic statistics and/or company results and/or information on upcoming releases or events;

3. Contains a brief summary of the author’s own opinion on such information;

4. Is not substantiated nor does it include any substantive analysis;

5. Reiterates the Kepler Partner LLP’s view on an existing recommendation or substantive research material; and/or

6. Is unlikely to impair your investment firm's compliance duty to act in the best interest of your client.

This report has been issued by Kepler Partners LLP for communication only to eligible counterparties and professional clients as defined by the Financial Conduct Authority.  Its contents may not be suitable for and are not to be communicated to or be relied on by retail clients. It is not an indication as to the suitability or appropriateness of investing in the security or securities discussed.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that Independent financial advice should be taken before entering into any financial transaction.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.