The Lindsell Train UK Equity Fund saw some “annoying” price falls in May, Nick Train has said.
In a monthly report for the fund released today (June 9), Train explained the fund’s underperformance in comparison to its benchmark.
The fund saw a loss of 3.6 per cent in May, compared with the FTSE all share total return seeing a return of 0.7 per cent.
The Lindsell Train UK Equity Fund has underperformed over the past three years
Source: Lindsell Train (Morningstar/FTSE Russell)
The fund has so far significantly underperformed the benchmark in the year to date, losing 10 per cent compared with a 1.5 per cent return for the FTSE.
Train highlighted share price falls for three of the fund’s biggest positions, saying they fell for “no discernable reason”.
Diageo fell 9 per cent in May, LSEG fell 6 per cent and Relx fell 5 per cent.
“Of course, I acknowledge, the backdrop for all equity markets is unpropitious today,” he said.
“But I might hope that predictable, cash generative businesses, like this trio, would’ve been havens in uncertain times.”
Train said the fund has increased its exposure to Fever-Tree, one of the portfolios’s biggest fallers in May, experiencing a share price drop of 15 per cent.
“The company’s AGM statement reaffirmed growth and profitability targets for its current financial year and the multi-year opportunity Fever-Tree has to build on its existing position as the world’s number one premium mixer brand seems as clear and exciting as ever,” he said.
“This is not enough, though, to prevent the shares trading toward their lows of the last three years and now 60 per cent below their peak of 2018.”
Sage also saw a double-digit share price fall, with Train saying he “hopes” the company’s finance director is correct when he said the board sees its shares as currently undervalued.
“Clearly, though, stock market investors disagree and presumably want more evidence that total group revenues will accelerate,” Train said.
Consumer credit reporting company Experian also saw its share price crash, experiencing a drop of 5 per cent in May.
However, there were a few holding that had a better month, Train said.
Burberry’s share price rose 7 per cent after it released its final results, despite highlighting difficult conditions for sales in China.
Unilever also saw its share price rally after activist investor Nelson Peltz was appointed to its board.
“The shares rallied, perhaps as UK investors recall how his presence on Cadbury’s share register led to a break-up and eventual sale of that company,” Train said.
sally.hickey@ft.com
