Nick Train has singled out Schroders Personal Wealth for praise in his review of 2019 during which the Finsbury Growth and Income Trust outperformed despite the defensive style with which he is associated taking a few knocks over the year.
Finsbury Growth & Income delivered net asset value returns of 23.1% in 2019 while its share price rose 21.8%. The FTSE International index delivered 19.2% over the period. The £1.9bn investment trust’s outperformance was not as strong as previous years. In 2018, its NAV fell 0.8% compared to 9.5% falls in the index while the previous year it rose 21.7% compared to 13.1% in the benchmark.
Train (pictured) said while he has a reputation for investing in “defensive” companies it was holdings that do not necessarily fall into this style bucket that delivered the investment trust’s outperformance in 2019.
Schroders and LSE not just a play on equity markets
Schroders was one such name he highlighted for its strong performance. It delivered 42% over the year and was one of two financial stocks singled out alongside the London Stock Exchange that was the largest outperformer with 90% returns.
“Of course, you might expect the LSE and Schroders to do well when stock markets do well, but an abortive bid for the LSE (from the Hong Kong Exchange) certainly helped,” he said in the December factsheet.
“We also think investors gave credit to Schroders for investing into its private wealth business in 2019 and hope the benefits of this investment become even more apparent over the next few years.”
In contrast, he pointed to Hargreaves Lansdown, which rose 7%, and Rathbones as stocks that went up but not as much as the FTSE All Share.
He remained upbeat on their outlook for 2020, stating: “If you think that UK economic and stock market performance could improve in 2020 – after the removal of political uncertainty – then it is possible HL will be a beneficiary of increased stock market volumes and savings flows. The same is true for Rathbones, another share that made little or no progress in 2019.”
Train also singled out double-digit growth from the Daily Mail, up almost 50%, alongside Mondelez (35%), Burberry (30%) and Sage (28%).
Nick Train’s patience runs short with Pearson
But it was not all smooth sailing. Train described AG Barr and Pearson as two of the portfolio’s “shockers”.
Train described 25% falls in AG Barr, manufacturer of fizzy drink Irn-Bru, as partially a reaction to “several years of wonderful gains”.
In contrast, he described Lindsell Train as “possibly over patient investors” in Pearson, which fell 30% over the year. The coming year would be important for the company as investors would be able to judge whether its multi-year investments digitising its intellectual property would ever pay off.
Train also acknowledged “defensive” holdings Diageo, Heineken and Unilever lagged the index, but committed to stick by the stocks stating all improved their brands and geographic positioning in 2019.
“They have done well in recent years and now other long-depressed industry groups that compete for UK investors’ capital look due a bounce,” he said.