Finsbury invests principally in UK listed companies with an aim to outperform the FTSE All-Share Index (net dividends reinvested). The portfolio manager is Nick Train (via Lindsell Train). Nick’s investment philosophy is to invest in durable, cash generative businesses that are under-priced relative to their valuation. The portfolio consists of approximately 30 stocks which are generally held for the medium to long term. International equities can make up to 20% of the portfolio.
Returns and Portfolio Composition
Finsbury has a 10 year return of 13.78% p.a. and a 15 year return of 16.02% p.a. excluding dividends. The current dividend yield is 1.89% p.a.
Currently, the Trust consists of 26 companies. The top 10 investments at Feb 28th 2018 are in the table below. These are all companies that aren’t available on the ASX, which helps diversify my portfolio in a way simply adding domestic holdings can’t!
The management fee is a low 0.70% p.a. Like Aberforth Smaller Companies Trust, there is no performance fee. Schweeet!
I have a lot of respect for investment managers who charge a reasonable fee for their expertise and deliver very acceptable returns.
Standard investment trust risks apply – the fund may decline in value, trade at a persistent discount to NAV or fail to outperform a similar passive small cap index fund. There is also the issue of currency fluctuations. As the Aussie dollar rises against the Pound, the value of my investment falls. To me, this is simply an opportunity to buy more should I wish. I’ll be a long term holder of FGT so currency fluctuations don’t matter too much.
Why I bought Finsbury Growth & Income Trust
This is another investment trust I discovered on diy investor (uk)’s blog and again, I was impressed by the consistent returns and management’s strong shareholder alignment. I spent about 6 months getting familiar with the trust and reading management reports. Nick Train (Finsbury’s portfolio manager) has a very sensible no bells and whistles approach to investing that I admire and try to emulate. He often talks about buying highly desirable brands with excellent products and their portfolio reflects this philosophy – they own shares of Heineken, Burberry (luxury fashion), Mondelez (parent of Cadbury), Diageo (owner of beverage brands Johnny Walker, Smirnoff and more) to name a few.
My investment portfolio is heavily focused on Australian stocks and my Superannuation portfolio is mainly invested in North American equities so I’m looking to diversify into European markets – whilst these companies generate income globally, a relatively greater proportion comes from Europe than my current holdings.
The trust has been trading around Net Asset Value and this seemed represent a fair opportunity to take a position. I bought 150 shares at 769 pence each. I’ll look to had to the holding as further opportunities arise.
Finsbury Growth and Income Trust complements my current holdings of Aussie LIC’s Barrack Street Investments and Cadence Capital and UK listed trust Aberforth Smaller Companies Trust. These investments have helped improve diversification and offer a good dividend yields. Over time, I plan to keep the LIC/IT component of my portfolio to no more than 15-20%.
Do you own shares in FGT or another UK Investment Trust?