Rated Fund 2015-2017. Boring is good in the long term
Lindsell Train Global Equity is jointly managed by the eponymous asset management firm's founders Michael Lindsell and Nick Train, supported by James Bullock.
It was launched in 2011 and is typical of the Lindsell Train stable with the managers aiming to achieve its objective of long-term income and capital growth by constructing a concentrated portfolio of 'exceptional' companies.
It only has between 20 to 35 holdings. The managers' focus is on those businesses they believe have truly sustainable business models and/or established resonant brands. In building the portfolio they look for companies demonstrating long-term durability in cash and profit generation.
Lindsell Train was one of the first groups to target absolute returns, though not explicitly. The managers point out that one of their key business principles is to treat investors' capital as they do their own (indeed they invest their own money in all the funds).
They follow four investment principles, namely that investors generally undervalue durable, cash-generative business franchises; concentration can reduce risk; transaction costs are a 'tax' on returns; and dividends matter.
There are times, such as in 2016, when the type of companies that Lindsell and Train invest in go out of fashion. But at the end of 2016 they stressed that they would not be changing their portfolios to move with the times, and instead have doggedly stuck with their current investments.
Although other types of shares may produce more exciting returns at times, they point out that theirs tend to produce 'boring' positive returns year in, year out.