London, UK, 30 January 2023
Edison issues review on Finsbury Growth & Income Trust
(FGT)
Finsbury Growth & Income Trust (FGT) has been managed by Nick Train for more than two decades. The trust's 2021 and 2022 underperformance should be put into perspective, as during his tenure, the manager has outperformed FGT's UK benchmark in 18 out of 22 years. Train is adhering to his long-term strategy of investing in high-quality companies that can grow regardless of the economic cycle, have high returns and low capital intensity, and can generate strong cash flows to support dividend growth. The trust's historical annual portfolio turnover is around 3%, illustrating that the manager really does have a long-term perspective. FGT's standing within the AIC UK Equity Income sector is commendable, with its NAV total return ranking first out of 20 funds over the last decade and third over the last five years, while its shorter-term rankings are also improving.
There is scope for FGT to be afforded a higher valuation once its relative performance further improves, as typically its shares traded close to NAV (in normal market conditions). Its 5.0% discount compares with a 0.4-5.2% range of average discounts over the last one, three, five and 10 years. FGT's board employs a progressive distribution policy; over the last five years its dividend has compounded at an annual rate of c 5.0%. The trust offers a 2.1% dividend yield.
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