First 50 update: Finsbury Growth & Income Trust outperforms benchmark

Stephanie Hawthorne
22 May 2018

While investors should never place too much emphasis on six-monthly returns, Finsbury Growth & Income Trust – one of our First 50 Funds for beginner investors has outperformed a lacklustre FTSE All share index in the first half of the year to 31 March 2018.

It saw a share price total return of 2.8%, while the index (its benchmark) fell by 2.3% over the same period.

Finsbury Growth & Income Trust also delivered a net asset value (NAV) total return of 2.1%. Undervalued growth companies have been the key contributors to the trust’s NAV performance over the past six months and these include Fidessa (up 63%), Hargreaves Lansdown (up 11%), London Stock Exchange (up 8%) and Manchester United (up 7%).

The board declared a first interim dividend of 7.2p per share, compared to last year’s 6.8p per share – an increase of 5.9%. The dividend was paid on17 May 2018 to shareholders who were on the register on Friday, 6 April 2018.

The board expects to declare the second dividend for the year ending 30 September 2018 in October 2018 and for it to be paid to shareholders in November 2018.

Nick Train, director of Lindsell Train Ltd and the trust’s portfolio manager, is surprised by the results, saying that “the outperformance is a bit noteworthy – because it is not supposed to be happening”.

“The pertinent question for equity investors in 2018 is not ‘should I invest in either beer or coal’– as investment bank equity strategists imply – but, instead, ‘how can I find ways to participate in the bull market being driven by digital technology’?

“Our performance (and that of everyone else) will be determined by how successful we are in this analysis.”

Commenting on the trust’s half-year results, Moira O'Neill, head of personal finance at Interactive Investor (Moneywise’s parent company), says: “Finsbury Growth & Income has outperformed its benchmark, the FTSE All Share index, over the six-month period. But the trust's manager, Nick Train, says this outperformance is noteworthy because ‘it is not supposed to be happening’.

“The reason for his comment is that the trust is invested in ‘quality equity assets’, shares in companies with strong balance sheets and strong positions in their sectors that tend to be vulnerable in the current economic environment.

“Think of the portfolio as Warren Buffett-style investing for the UK. Like Warren Buffett’s letters, Mr Train's Portfolio Manager Review is always worth reading.

“He believes investors should look to participate in the ‘bull market being driven by digital technology’.

“This is a fund to stash away for the long term. It is trading at a small premium to NAV of 0.5%, so you may want to put it on your watch list and wait until it is on a discount.”

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