The Richard Hunter Interview: Lindsell, Train… and Bullock

TL;DR

James Bullock, Joint Portfolio Manager for the Lindsell Train Global Equity Fund, explains the investment objectives and strategy of the fund, emphasizing the focus on protecting and growing the real value of capital through selective investments in high-quality businesses.

Transcript

hello and welcome to the richard hunter interview as ever this is the place where i'll be discussing matters of interest with a whole range of investment experts lincoln train of course is a household name in investment terms and we've spoken with both michael linzel and nick train in these interviews in the past what is probably less known however... Read More

Key Insights

• 💗 The Lindsell Train Global Equity Fund aims to protect and grow the real value of capital through selective investments in high-quality businesses.
• 👨‍💼 The fund adopts a concentrated portfolio approach, focusing on businesses with a competitive advantage and the ability to generate above-average returns.
• 👻 Sector and country allocations are not explicitly targeted, allowing flexibility to invest in businesses with superior performance regardless of their sector or geographic location.
• 🥹 The fund's holdings, such as Diageo, London Stock Exchange, and Nintendo, exemplify its investment strategy and long-term value creation focus.
• 💪 The fund's relative performance in 2021 was disappointing, but the underlying business performance of portfolio companies remained strong.
• 🥹 The COVID-19 pandemic did not significantly impact the fund's investment approach, as it remained committed to holding long-term investments in high-quality businesses.
• 🎁 The current market environment presents potential opportunities, and the fund may engage in portfolio activity based on evolving market conditions.

Questions & Answers

Q: What are the investment objectives and policy of the Lindsell Train Global Equity Fund?

The fund aims to protect and grow the real value of clients' capital by investing in equities. The investment strategy focuses on long-term, concentrated portfolios comprising businesses that can generate above-average returns and have a competitive advantage to sustain those returns.

Q: How does the fund approach sector and country allocations?

The fund does not explicitly target specific sector or country weightings. Instead, it focuses on identifying businesses that can earn higher than average rates of return on capital. The investment team seeks to find businesses with a competitive advantage, regardless of their sector or geographic location.

Q: Can you provide examples of the types of companies the fund invests in?

The fund primarily invests in consumer franchises with strong heritage and customer loyalty, intellectual property owners with differentiated products or services, and networked marketplace businesses with strong customer lock-in. Examples of holdings include Diageo in the consumer franchises segment, London Stock Exchange in intellectual property, and Nintendo in the entertainment sector.

Q: How has the fund performed during the COVID-19 pandemic?

In relative terms, the fund's performance in 2021 was disappointing compared to its benchmark, the MSCI Global Index. However, from an absolute perspective, the underlying business performance of the portfolio companies remained strong. Many companies in the fund, such as Diageo, London Stock Exchange, and Nintendo, entered and exited the pandemic in excellent shape with record earnings. Despite the short-term market volatility, the long-term perspective remains optimistic.

Summary & Key Takeaways

• The Lindsell Train Global Equity Fund aims to protect and grow the real value of clients' capital by investing in high-quality equities with the potential for above-average returns.

• The fund adopts a long-term, concentrated approach, focusing on businesses that can generate higher than average rates of return and have a competitive advantage to sustain those returns.

• Sector and country allocations are not explicitly targeted, but the fund predominantly invests in consumer franchises, intellectual property owners, and networked marketplace businesses.

• The top holdings of the fund include Diageo, London Stock Exchange, and Nintendo, which exemplify the fund's investment strategy and focus on long-term value creation.