Train’s on track: Finsbury Growth & Income Trust February commentary

Cloudscape photography, fluffy clouds coloured with sunset light in London

In February Finsbury Growth & Income Trust Net Asset Value fell 1.6% while the FTSE All-Share rose 2%, but Nick Train, Finsbury’s portfolio manager, tells investors to stay the course.

Train said, “I dislike having to recommend patience to investors, who have had to exercise this virtue for many months already; but I do recommend it still.”

In March four big holdings worth 30% of the portfolio saw share prices fall between 7%-11%. In Alphabetical order these were Hargreaves Lansdown, Heineken, RELX and Unilever.

But, it is in these four holdings Train finds his optimism, saying, “There really were encouraging aspects to all four sets of results.”

He continued, “while I know few things are less fashionable in 2021 than dividends, the dividend announcements from the four offer useful information to long-term investors, we believe.”

Hargreaves Lansdown shares, up 17% at one point in 2021, closed in February back where they started at the beginning of the year following Peter Hargreaves sale of another block of shares.

Hargreaves Lansdown increased its final dividend back in August 2020 and last month’s interim is up by a further 6%.

Heineken has suffered through the pandemic, as roughly 40% of its business is conducted through bars and clubs. In response, the company chose to cut its costs 11%.

Train said, “I can’t tell you when, but when the bars do reopen and the Roaring 20s kick in, Heineken’s profit recovery, on this reduced cost base, will be spectacular.”

RELX conducts 90% of its business in the Data and Information space, but unfortunately, the remainder is in Business Exhibitions, which has dropped off over the pandemic.

Train added, “The steady compounding of this formidable company generated very satisfactory total returns and, notwithstanding the hiatus for its exhibitions business, the board has signalled to investors it can see a continuation of steady, very profitable growth.”

While suffering in emerging markets, Unilever increased its last 2020 dividend by 8% in Sterling terms.

Train was encouraged with increased penetration of Unilever product categories and premiumisation, saying “We expect these trends to allow the company to continue to grow its dividend in real terms. ”

Turning from patience to reward, Train highlighted the stunning success of February. Manchester United shares rose 28%, Daily Mail and & General Trust were up 17%. The LSE Group “marched on” in February, up another 11% to an all-time high.


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