Rated Fund 2016-2017. Seeking absolute returns from a concentrated portfolio
Managed by both Michael Lindsell and Nick Train, this fund won Money Observer's Best Larger UK Growth Fund award in 2015. It was launched in 2006 and is often regarded as the open-ended fund equivalent to the Finsbury Growth & Income investment trust, which Train also manages.
Their investment portfolios are very similar, featuring household names such as Unilever and Burberry. Both are managed using the same investment approach that targets absolute returns. Lindsell and Train stress that they care more about maintaining or growing the real value of investors' capital and income over time than outperforming a stock market index.
Despite their similarities Lindsell Train UK Equity falls in the Investment Association's UK all companies sector, while Finsbury Growth & Income is categorised under UK equity income. This is the reason they have also been categorised as different types of Rated Funds. Lindsell Train UK Equity has a yield of just over 2 per cent, but growth investors can opt for the income to be accumulated.
The investment process used by Lindsell and Train across all their funds is based on their conviction that inefficiencies exist in the valuation of exceptional quoted companies. These are the businesses they focus on, seeking out durable, cash-generative franchises which they can invest in.
They find the majority of their candidate investments in a select group of broad industry categories - consumer branded goods, media, pharmaceuticals and retail financial services. Their portfolios are normally concentrated into 20-35 holdings and turnover is kept to a minimum.