- Trust lags FTSE All Share
- Burberry and Diageo drag
- NAV down 3.2% in April
Nick Train, manager of the popular Finsbury Growth & Income Trust (FGT), has apologised to shareholders for the trust’s ‘poor investment performance’ not only over the past six months but over three years.
The manager also acknowledged the ‘growing impatience’ from the shareholders.
Train’s apology comes after the trust lagged behind its benchmark, the FTSE All Share index, for the six months ending 31 March 2024.
The trust reported a 5.9% rise in NAV (net asset value) Total Return compared with a 6.9% rise in the FTSE All Share index.
However, during April the trust's NAV fell 3.2%, wiping out its gains year-to-date and leaving it down 1% on last December.
POOR STOCK SELECTION
Some of the trust’s underperformance can be attributable to stock selection, as already noted in the trust’s April factsheet. Train said: ‘Sometimes a portfolio just clicks and gains are effortless. At other times it seems that all the breaks are running against you. Sadly, the latter is the case with your company’s portfolio currently.
‘Putting it simplistically: we do not own oil and mining shares and they have been going up. We own meaningful positions in premium and luxury consumer brand owners Burberry (BRBY) and Diageo (DGE).
‘Diageo being out of favour is well-established and it is still possible the next set of results will disappoint already low expectations. Nonetheless, Diageo’s shares have now fallen over 30% from their peak in 2021 and we are sure it is right to be looking ahead to better trading for the company.’
As of 31 March 2024, Diageo made up 10.5% of the trust's portfolio while Burberry represented a 5.2% holding.
Other fallers in the portfolio included French spirit-maker Remy Cointreau (RCO:EPA) and UK wealth manager Schroders (SDR).
It wasn't all bad news, however, as software company Sage (SGE) - which makes up 11.2% of the portfolio - and publishing and data analytics business RELX (REL) - which represents 12.4% - have both performed strongly over the period.
VALUE OPPORTUNITY
Train remains optimistic about the trust’s performance due to the ‘tremendous value building in the portfolio.’
‘I believe we own significant positions in a number of businesses that could grow their market capitalisations multiple times over the next decade or more,’ added Train.
Separately, the trust's chairman Simon Hayes revealed he would step down as chairman in January 2025 after the company’s annual general meeting, having been a director at the company for nine years, and would be succeeded by Pars Purewal, the former chairman of Royal London Asset Management.
