Nick Train, manager of one of the UK’s largest investment houses, has apologised for his poor investment performance, citing the “malaise gripping the UK equity market”.
Train’s Finsbury Growth and Income trust reported its end-of-year results today. It revealed had only returned 2.7 per cent in the year to 31 March, compared to double-digit returns for the wider sector.
“What I find difficult to write is not the acknowledging of our poor investment performance or apologising for it. We do acknowledge and apologise for it,” he said.
“No, what is difficult is finding a credible way to convey to shareholders why we remain optimistic about the company’s investment portfolio.”
“It is difficult, because I am conscious that I have been vocally optimistic about its prospects throughout the three years and more of underperformance. So why should I be right this time?”
For the year to 27 May, Train’s results are even poorer. The trust lost 1.7 per cent of its share price value over the last year, compared to the Morningstar UK index gaining 14.2 per cent.
Even other UK-focused equity income investment trusts, which have struggled to keep up with the index, still generated an average return of 9.5 per cent over the last year.
Over the last five years, the trust’s stock price has returned only 6.4 per cent, compared to 33.4 per cent for other trusts and the index.
Sector-specific concerns have plagued the trust, as it does not hold oil and mining stocks, which have boomed on London’s main market in recent months.
Finsbury’s lack of exposure to artificial intelligence and tech-related companies is an additional oversight.
Instead, the trust has focused mainly on consumer-serving companies, building up large positions in companies like Rightmove, Burberry, and drinks manufacturer Fever-Tree.
“The portfolio did not, with the benefit of hindsight, have enough exposure to companies with products and services likely to become more relevant and valuable to their customers as we proceed deeper in the 21st century,” Train said.
“To put no finer point on it, the portfolio in 2020 did not have enough exposure to technology or companies well-positioned to exploit technology. It had some, but evidently not enough.”
As a result, Train said he had upped the share of the portfolio invested in tech from around 30 per cent in 2020 to 55 per cent today, but he said he did not know if that was “yet enough”.