Veteran stockpicker Nick Train has upped his stake (30 May) in Finsbury Growth & Income Trust (FGT) to 3.92% in a show of confidence in the well-followed fund’s long-run prospects.
The purchase followed results (29 May) for the half to 31 March 2025 which revealed another period of underperformance, the company’s net asset value (NAV) total return of 2.1% lagging the 4.1% rise in the benchmark FTSE All-Share Index.
However, chairman Pars Purewal called out ‘encouraging signs of recovery in a number of companies within the portfolio and in prospects for the UK market as a whole’.
For much of the half, the trust’s portfolio of quality companies with hard-to-replicate data assets or brands, which includes luxury leader Burberry (BRBY), Irn-Bru maker AG Barr (BAG) and software giant Sage (SGE), delivered strong relative and absolute returns, only to give up ground towards the period-end in response to rising concerns over President Trump’s tariffs.
Thankfully, since 2020, ‘buy-and-hold’ investor Train has tilted the trust’s exposure towards data, software and technology platform companies, reducing its weighting in consumer brands.
This shift has yet to produce a sustained improvement in performance, yet Train is ‘sure that relatively speaking it has meant your portfolio is better prepared to withstand the effects of tariffs and possible trade wars than it otherwise would have been’.
He explained: ‘It is not clear that tariffs matter at all for major portfolio holdings, such as RELX (REL), London Stock Exchange Group (LSEG) or Experian (EXPN), because their products are digital, not physical. Moreover, the subscription-type revenues earned by that trio and other important holdings, such as Rightmove (RMV) and Sage, are reassuringly predictable.’
Two large holdings which do make products sold globally are Unilever (ULVR) and Diageo (DGE). While the former’s exposure to any permanent US-imposed tariffs is relatively modest, the situation for the latter is ‘ostensibly, less reassuring’ conceded Train.
Spirits leader Diageo derives half its profits from the US and has ‘the misfortune that two of its most important and popular products there are Mexican tequila and Canadian whiskey, both now at risk of tariff imposition’.
Nevertheless, Train continues to look for opportunities to top up the position in the belief Diageo should gain market share through the tariff turmoil, and if Trump cuts taxes for US citizens then ‘Diageo’s exposure to US consumers would be seen as a strength, not, as currently, a weakness’.
In conclusion, Train stressed Finsbury Growth & Income is ‘a collection of outstanding, predominantly global, companies, with obvious growth opportunities. Then I look at our NAV performance and wonder why it isn’t better. Then I think to myself I should probably buy some more Finsbury Growth & Income Trust shares for myself. I do hope all shareholders will be rewarded for their patience, including me.’
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