10 Years Of Lindsell Train Global Photo by Andreas Weiland on Unsplash

10 Years Of Lindsell Train Global Equity

Next month sees the tenth anniversary of Lindsell Train Global Equity, one of the UK’s most popular funds. At the time of writing, it’s up 373% since it launched which represents an annualised return of 17%.

I’ve been invested in this fund since April 2016, so roughly half the time it’s been available.

However, it marginally underperformed world markets in both 2019 and 2020 and that’s led many people to ask whether it’s best days are behind it.

The Lindsell Train stable

Lindsell Train Limited was formed in 2000 and it manages three open-ended funds and two investment trusts:

  • Lindsell Train Global Equity is its youngest but largest fund with assets of £8.1bn.
  • Lindsell Train UK Equity, launched in 2006, is slightly smaller at £6.4bn.
  • Finsbury Growth & Income (FGT) has been managed by Lindsell Train since 2000. It has assets of £1.9bn, up from £100m when Lindsell Train took over. This trust dates back in 1926 and was previously known as Scottish Cities.
  • Lindsell Train Japanese Equity was launched in 1998 but has only been managed by Lindsell Train since 2004. It has £600m in assets.
  • Lindsell Train Investment Trust (LTI) was launched with just £20m in 2001 and now has £240m in assets. Nearly half of its portfolio is a 24.2% stake in Lindsell Train Limited, the company that manages all these funds.

There’s quite a lot of overlap between these funds and trusts.

The UK fund and Finsbury Growth & Income have nearly identical portfolios.

The Global Equity fund owns a lot of the same UK companies and also has many holdings in common with both Lindsell Train Investment Trust and the Japanese Equity fund.


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Lindsell Train Limited looked after a total of £22bn in assets as of September 2020 suggesting there’s around £5bn managed outside of these main retail funds.

Lindsell Train North American Equity was launched last April but this isn’t public-facing at this time. Lindsell Train Investment Trust has a £15m holding in this embryonic fund while co-founders Michael Lindsell and Nick Train have put money in as well.

Investing strategy

The Lindsell Train playbook is pretty well known at this point:

  • Its funds and trusts typically have between 15 and 25 holdings so they are highly concentrated.
  • The aim is to find “durable, cash generative business franchises” and to hold them for the long term.
  • The funds very rarely buy new positions or sell existing ones (more on just how rarely later).
  • Certain sectors tend to be favoured, namely Consumer Branded Goods, Internet/Media/Software, Pharmaceuticals and Financials.

Nick Train has clarified the themes behind the company’s investment choices in recent interviews. In order of portfolio weighing, he splits them into:

  • Digital winners – “not only obvious data analytics or technology businesses … but companies in other industries that are doing value-creating things with data or technology to deepen their relationships with their customers”
  • Beloved and trusted consumer brands – such as those owned by Diageo and Unilever
  • Luxury or premium brands – e.g. Burberry and Remy Cointreau
  • Stock market proxies – “specifically asset management companies with growing private wealth franchises”

How Lindsell Train Global Equity has developed

Let’s take a look at how the Global Equity fund has evolved over the last decade.

MetricDec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Companies owned24262626262627262624
B share performance5.3%11.3%30.2%10.5%19.5%23.8%26.1%11.1%19.4%11.7%
MSCI World-1.3%10.7%24.3%11.5%4.9%28.2%11.8%-3.0%22.7%12.3%
Relative to MSCI World6.6%0.6%5.9%-1.0%14.6%-4.4%14.3%14.1%-3.3%-0.6%
Cumulative return5.3%17.2%52.6%68.6%101.5%149.5%214.6%249.4%317.2%366.0%
Fund size (£m)441273506781,2502,0693,7025,2668,4358,305

The number of portfolio positions has remained remarkably consistent over time.

When I did a similar piece on Fundsmith Equity last year, I noted it started with 22 companies but has since grown to 30. Fundsmith is about three times the size of Lindsell Train Global Equity, though, so has needed to broaden its net a little more.

The absolute performance of Lindsell Train Global Equity has been excellent throughout. 2011 was not a full year but was still positive, and every year since has seen double-digit returns.

The relative performance against world markets has been a little inconsistent, trailing in four years out of ten. And a lot of its lead over world markets arose in just three years: 2015, 2017, and 2018.

The worst annual underperformance was 4.4%, which is impressive over a decade of returns.

And despite recent concerns that Lindsell Train is ‘under-teched’, for want of a better expression, the underperformance over the last two years combined is just 4%.

Fundsmith has been more consistent, outperforming world markets every year from 2011 to 2020 and just underperforming by 1% in the last two months of 2010, immediately after it launched.

However, it’s worth pointing out that the Lindsell Train strategy has two decades of public numbers behind it whereas Fundsmith just has the one.

The Lindsell Train Investment Trust returned 8.9% a year in its first decade from 2001 to 2011 versus 2.2% per annum for world markets. That’s a lead of 6.7% a year. Lindsell Train Global Equity has outperformed by around 5% a year since 2011.

Lastly, Lindsell Train Global has grown in size nearly 200 times since the end of 2011 although the rate of growth has slowed and then reversed in recent years.

The reverse was partially caused by Hargreaves Lansdown removing Lindsell Train Global Equity from its infamous Wealth 50 list in July 2019 in the wake of the Woodford scandal. As Lindsell Train held a large stake in Hargreaves Lansdown there were concerns over a potential conflict of interest.

Since mid-2019, Lindsell Train Global Equity has shrunk in size by about £1bn. It’s returned about 3% over this period, so on a net basis it would seem just over £1bn has been withdrawn from the fund.

How the portfolio has changed since 2011?

The short answer to this is hardly at all.

The full portfolio for December 2020 is yet to be published so I have used June 2020 in its place.

I don’t think any companies have been bought or sold outright since then as nothing has been mentioned in its monthly factsheets.

The latest top ten positions (January 2021) are also very similar in size to those as of June 2020.

CompanyDec
2011
Dec
2012
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Jun
2020
Astellas Pharma4.0%3.9%2.1%1.9%2.1%2.6%2.3%1.9%2.5%2.6%
Brown-Forman3.1%2.0%1.9%1.4%1.3%0.9%1.0%1.2%1.2%1.3%
Canon3.9%2.7%1.9%1.8%2.0%1.3%0.9%0.5%0.2%
Celtic0.3%0.4%0.4%0.2%0.2%0.1%0.1%0.2%0.1%0.1%
Diageo6.4%5.1%5.0%7.1%8.1%7.6%7.6%7.9%7.6%7.1%
Dr Pepper Snapple4.5%4.5%4.0%3.4%2.6%1.8%1.8%
eBay5.0%4.8%5.1%5.3%2.4%3.3%3.2%3.0%2.9%3.8%
Hargreaves Lansdown2.2%2.7%4.0%3.9%
Heineken6.4%6.9%7.3%6.7%7.5%7.2%7.6%7.1%7.3%7.5%
Hershey1.5%1.3%0.8%0.5%
International Speedway0.7%0.7%0.9%0.9%0.7%0.7%0.6%0.6%
Intuit4.7%4.9%4.9%5.2%4.8%4.8%4.8%4.9%4.8%4.8%
Ito En4.4%4.1%3.9%2.5%1.5%1.4%1.1%1.1%0.6%0.7%
Japan Exchange (Osaka SE)4.8%5.9%6.0%3.4%2.6%2.3%1.9%2.0%2.3%3.1%
Juventus0.2%0.8%0.8%0.9%0.8%0.9%1.5%1.9%1.7%1.4%
Kao6.6%5.6%4.8%5.3%4.9%4.9%4.9%5.1%4.9%4.5%
Kraft4.8%1.5%1.6%1.5%
London Stock Exchange4.9%5.4%5.1%5.4%4.9%6.0%5.4%5.0%6.6%7.0%
Meiko Network Japan2.1%2.0%1.0%0.7%0.5%0.3%0.2%0.1%0.1%
Mondelez2.9%4.1%4.9%5.0%4.9%4.8%4.8%5.0%4.7%
Nintendo4.6%5.2%5.6%5.0%4.7%5.9%5.4%4.9%5.3%6.6%
PayPal4.2%4.9%4.8%5.2%4.9%4.8%
Pearson6.5%6.9%7.5%8.3%6.3%5.5%4.4%4.9%3.3%3.2%
Prada2.2%2.2%
PepsiCo4.0%4.9%4.8%4.8%4.8%4.8%
RELX (Reed Elsevier)4.4%4.9%4.9%5.0%4.9%5.0%4.9%5.0%5.0%4.7%
Shiseido4.1%4.2%5.0%4.4%4.8%4.8%5.0%4.9%4.7%
Unilever6.4%6.6%7.4%7.3%8.3%7.7%8.0%8.0%7.8%8.2%
Walt Disney3.6%3.0%5.0%5.1%4.8%4.9%4.8%4.9%5.1%4.5%
WWE1.9%2.0%2.7%2.4%3.3%3.2%3.0%5.1%4.0%3.1%
Total in equities95.5%98.0%98.8%97.0%96.7%97.8%96.8%97.7%99.1%99.1%

The portfolio started with 24 companies back in 2011.

Two more positions were created as a result of demergers (Mondelez from Kraft and PayPal from eBay).

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Four brand new positions were added over the past decade, namely Shiseido (2012), PepsiCo (2015), Hargreaves Lansdown (2017), and Prada (2019).

Six positions have been sold. One of these was Kraft, while the larger, chocolate-powered Mondelez was retained. International Speedway (NASCAR) was taken private and Dr Pepper Snapple was merged with Keurig which prompted Lindsell Train to take their leave.

Hershey, Meiko Network, and Canon were sold but the last two of these positions hadn’t been added to for years and had become tiny holdings due to the growth in the overall size of the fund.

The end result is that we have a portfolio of 24 companies again, right back where we started.

What’s more, around 85% of the current portfolio by weighting consists of companies that were held back in 2011.

Low, low turnover

It’s an astonishingly low level of portfolio turnover.

On average, each year has seen one position change with either a new position bought or an old one sold.

When you look at how the individual position sizes have changed over the years, there has been very little movement there as well.

Diageo, Heineken, and Unilever have remained among the largest positions throughout. London Stock Exchange, Nintendo and the eBay/PayPal combo have all grown in importance but were around 5% since the beginning.

A second tier of Intuit, Kao, RELX, and Disney have remained important positions over the whole decade.

However, a number of major initial positions have been allowed to dwindle somewhat, such as Astellas Pharma, Brown-Forman, Ito En, Japan Exchange, and Pearson, although they have remained part of the portfolio.

Pearson is probably the position that Lindsell Train has attracted the most grief for in recent years. That’s partly because its profile is higher being a UK-based business. It was the fund’s largest position at 8.3% as recently as 2014 after its share price rose from around £10 to nearly £15. It’s now below £8.

The four brand new positions are all pretty sizeable, with Lindsell Train taking a meaningful stake at the outset rather than building slowly over time.

The liquidity question

One issue with funds of this size is have they grown so big that it’s started to affect their investing style?

To examine this, I made a rough estimate of the ownership stake held by Lindsell Train Global Equity, based on current market cap and its position size as of June 2020.

It’s rounded to the nearest percentage point to hide the crudeness of my maths.

CompanyMarket cap
£bn
L/T Global
stake
Astellas Pharma231%
Brown-Forman250%
Celtic0.17%
Diageo721%
eBay431%
Hargreaves Lansdown84%
Heineken441%
Intuit800%
Ito En51%
Japan Exchange93%
Juventus112%
Kao242%
London Stock Exchange461%
Mondelez561%
Nintendo611%
PayPal2510%
Pearson64%
Prada122%
PepsiCo1330%
RELX361%
Shiseido222%
Unilever1640%
Walt Disney2500%
WWE39%

There are a lot of chunky companies here. Two-thirds are valued in excess of £20bn.

The vast majority of stakes held are 2% or less, so routine buying or selling should be relatively straightforward.

The main exceptions are Celtic (a sub-£100m AIM company), Juventus (£1bn), and WWE (£3bn). Collectively, these three positions only make up 5% of the portfolio so that wouldn’t seem to be a major concern.

Diageo, Unilever, RELX, London Stock Exchange, Hargreaves Lansdown, Heineken, and Mondelez are held by the UK Equity fund and Finsbury Growth & Income as well.

But even when you add these positions together, I’d say only Hargreaves Lansdown would be of concern from a liquidity point of view. Lindsell Train owns 13% of Hargreaves Lansdown across all its funds.

Back in May 2019, a short document from Michael Lindsell said that the estimated capacity for the Global Equity fund was around £15bn. That’s almost twice its current size, so there’s plenty of room on that front.

Skin in the game

The three co-managers have a decent amount invested here.

Based on 30 June 2020 holdings and current prices, Michael Lindsell has £5.5m invested, Nick Train has £0.9m, while heir apparent James Bullock has £0.25m.

For both Lindsell and Train, these stakes are small beer of course. Train has a lot more invested in Finsbury Growth & Income (£28m) and Lindsell & Train’s combined 72% stake in Lindsell Train Limited is worth some £340m.

Three directors of the Global Equity fund own a collective £0.8m as well.

Most of them have been increasing their holdings over the past few years, which is encouraging to see.

Picking the 2016 accounts at random to make a comparison, Lindsell’s holding has more than quadrupled and Bullock’s has risen even more, albeit from a much lower base. However, Nick Train has reduced his holding by a quarter.

Two of the three directors have increased their positions and the other owns the same amount.

Costs: decent but not the cheapest

Before starting this exercise, I was under the impression that Lindsell Train had been pretty good at passing on cost savings as the fund increased in size.

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However, that doesn’t seem to be the case. Instead, they started fairly low and they’ve largely remained that way.

There are five units in the fund.

The management charge for the A and B £ versions was 1.15% and 0.65% respectively when they were introduced in 2011. These were reduced to 1.10% and 0.60% in July 2019.

The C $ shares and E € shares have been 0.65% since their launch in 2014 and 2017.

The D £ shares (just available through Hargreaves Lansdown as far as I know as their minimum investment is £200m) have been 0.45% since 2014.

Most of the money invested in the fund is in the B units (£3bn) and D units (£4bn) so the overall cost including admin charges has shrunk over the last decade from around 1.3% a year to 0.7%.

In other words, it’s about halfway between the cheap-looking Scottish Mortgage (0.4%) and expensive-looking Fundsmith Equity (1.0%).

Still, such is the size of this fund, Lindsell Train was able to generate nearly £45m in fees from it in 2019.

In summary

I’ve stuck with this fund throughout its recent bumpy patch. And thanks to its longer-term growth, it’s become one of my larger positions.

I like the fact Lindsell Train has stuck to their gameplan and they seem genuine in their enthusiasm for the prospects of many of their holdings.

But with the likes of Blue Whale and Baillie Gifford doing so well, we’re now seeing a lot more competition in the quality investing space that Lindsell Train and Fundsmith seem to dominate for some time.

Smaller trusts like Mid Wynd and Martin Currie Global Portfolio are also proving their worth.

Here’s how Lindsell Train Global and Fundsmith Equity rank over various time periods:

Fund1 year3 years5 years10 years
Lindsell Train Global17289496
Fundsmith Equity13656393
Number of global funds339296260171

Lindsell Train Global hasn’t quite completed a full decade yet, so I’ve put in its position based on its performance since inception.

Even after the last two years, both funds still have highly respectable long-term records. As I aim to trade as little as possible, that’s what I am most interested in.

I’m still of the view that the returns in the 2020s for these funds will struggle to match the heights of the 2010s but I’m happy to keep holding both of them.


Disclaimer

Please note that I may own some of the investments mentioned above -- you can see my current holdings on my portfolio page.

Nothing on this website should be regarded as a buy or sell recommendation as I'm just a random person writing a blog in his spare time and I am not authorised to give financial advice. Always do your own research and seek financial advice if necessary!


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17 Replies to “10 Years Of Lindsell Train Global Equity”

  1. Another great write up. Years ago for myself and a couple of family members portfolios with a windfall I went thirds into Fundsmith, Train and of course Woodford. Fundsmith has done very well and Train pretty well with poor old Woodford just about returning the original investment it seems. Ive been recycling the Woodford liquidations into Blue Whale. Im only intending holding these 3-4 for the next 10 years. Now I have a bit more time I shy away from Funds and search out ITs with a discount and approaches I like plus the occasional individual stock.

  2. Nice write up as ever IT. I held the FGT trust for several years with a decent return but became a little disillusioned with their lack of interest in climate change and related issues. I did email the company on a couple of occasions but failed to get a satisfactory response.

    I was also becoming concerned about the risks associated with a concentrated portfolio following the fallout from the Neil Woodford affair and HL so decided to offload the shares back in 2019.

    Good luck with your holding and I hope the trust managers will re-evaluate their position on climate and adopt a more positive stance in the future.

  3. Great write-up. Funds need careful evaluation when they’ve had a couple of sub-optimal years, to check whether it’s ‘them’ or ‘the market’. It’s naive to expect a fund to perform perfectly in all market conditions.

    I would argue that Lindsell is more on the defensive side with its Consumer holdings, and so the past couple of years are times you’d expect them to outperform. Assuming that things come down at some point (Retail investors with FOMO about Bitcoin & Tesla…???) then I would expect Lindsell Train to do better than Baillie Gifford for example.

    And that’s why arguably it makes sense to hold both, as it’s impossible to time these things.

    I suppose the joke is that 5 years ago or so, everyone used to argue that Lindsell/Fundsmith stocks were overpriced! How’s that looking now, relative to Tech and SaaS stuff?!

    Finally, to offer a different slant so as not to seem like too much of a fanboy, I do think they have felt a little sleepy in the past few years – only because of the rate of innovation occurring. I would like to see one or two more ‘new’ companies in the portfolio like Fevertree (which they did a brilliant job of timing their purchase btw).

  4. Thanks DIY. I glossed over the environmental angle on this one admittedly but it strikes me as one of those funds that tends to own decent companies on this front without saying so explicitly.

    I think LT’s UK-only funds have a little more in the way of liquidity issues but nothing too concerning.

    I’d say Woodford’s problem wasn’t so much an issue of concentration but that he had overly large stakes that he essentially couldn’t get out of – both on the quoted and unquoted side. That and being incapable of admitting when he had made a mistake of course!

    And, of course, having an closed-end structure in the case of FGT means you don’t have to sell because of redemption issues.

  5. Thanks, Tom. I’m leaning towards the LT style being out of favour temporarily rather than an ongoing and fundamental issue. I’m adding a bit of Baillie Gifford via Keystone (late to the party as usual!) so I’m taking the multi-manager approach too I guess.

    Sleepy is probably fair though although that’s kind of their thing I guess!

  6. Thanks for that write up which is very informative. I don’t hold any stakes in the Funds/Trusts mentioned mainly because the charges are very high particularly on Fundsmith which seems to me has gone very lazy at 1% against SMT at 0.4%. As regards performance neither of the two funds are stellar when you look at the new funds set up in recent years at BG – Positive Change Fund, PHI and now Keystone to replicate in Trust form the Positive Change Open Ended Fund. Recently bought into Keystone on the basis that BG will want a good start to this fund in the first year so fingers crossed. Mention was made of Woodford and we now hear of the return again to Fund Management of Neil Woodford. This action I feel will not help the reputation of funds and wonder does the FCA realise the potential damage to Funds/Trusts in the future. Expect that Funds will start to invest more in Bitcoin related listed shares which will be interesting to see if Regulators/Investors accept such a move as valid/acceptable.

  7. Hi there,

    This is such a fab writeup. I am currently in the process of starting a blog. Where do you get all your data from? Is this looking at investor relation website or is there a specific system? Thanks

  8. Thanks, Fred. All the data comes from the annual reports on the Lindsell Train website although I had to ask them for the ones for the first few years. I just picked out the bits I wanted.

    I’ve covered this fund a few times now (too many times some people might say!) so a lot of the information was already in a spreadsheet and just added the extra bits where needed.

    I tend to save reports as and when I come across them as you never know when they might disappear from the websites concerned.

    Hope that’s useful and best of luck with your blog. I found it took a while to get going and in the first year or so you tend to experiment with various different things, some of which work well but much more that doesn’t. Perseverance is definitely key!

  9. Some good analysis here and I like your writing style.
    I’ve often looked at FGT and LTI over the years but never actually bought them! (I run an IT only portfolio so ignore the UT’s).
    LTI put me off thanks to its often large premium (currently c13%) and the large holding in the management company (currently c47%).
    FGT is more difficult for me to explain away, but it’s more to do with the question “how would this fit in my existing portfolio?” The yield has always been relatively low (under 2%) and I have higher yielding equity income trusts. The growth has been good, but I have more obvious growth trusts. So it never got in!
    I’m interested to see that you and “Global Investor” bought into KPC (Keystone) recently; I did this week too, off the back of BG’s announcement of the restructure. I have high hopes for this for the long term. It was either this or Impax Environmental and the latter is on a 10% premium and I like the BG approach.

  10. Thanks, Nick.

    Yes, LTI strikes me as something that would be difficult to buy and sell in much volume and the widely varying premium would have me second-guessing as to whether I should sell or trim any position, assuming I did have one. I did consider it when initially buying LT Global though.

    FGT’s greater UK focus wasn’t what I was looking for at the time. It hasn’t done as well as the Global fund in the last five years, due to that UK influence. LTI has done a lot better than Global, though, thanks to that big stake in the management company and the increase in assets managed over that time.

    Going to be interesting to see how KPC develops. The open-ended version seems to be retaining its big stake in Tesla while a few other BG trusts and funds have reduced it somewhat. That doesn’t necessarily mean the initial KPC portfolio will follow suit of course.

  11. Great write up as usual! And like others, I like the writing style!
    I’ll probably be one of the few who won’t be investing in LT trust. The investment in management company is a big black hole for me. Why should we invest in LT’s ability to extract fees from other investors? Also how frequently and accurately is this investment valued? I generally stay away from trusts that have large unlisted investments.
    Also any persistent discount or premium is a huge red flag.
    Have they given reasons for holding on to same stocks?

  12. Thanks, BuildTheWall. I looked at the valuation process for the stake in the asset management business in this article last year. It seemed fairly conservative to me and it’s updated monthly based on the business’s earnings and the value of assets managed.
    https://www.itinvestor.co.uk/2019/07/whats-a-sensible-premium-for-lindsell-train-investment-trust/

    As for the low portfolio turnover, that’s just their style of investing, believing that trading too much typically leads to lower returns and it racks up additional costs.

  13. Dear Stuart: Thank you for the terrific post. Thorough and insightful as always. In the ‘quality investing’ space, you mentioned Blue Whale and Martin Currie as smaller funds making their mark. I would be really interested in your views about Equitile Resilience Fund which I think is similar but receives scant coverage. Concentrated portfolio (35 holdings) of high-quality growth companies. Best, DS.

  14. Thanks, DS.

    Just had a very quick look at that Equitile fund and it seems a little less concentrated than the likes of Fundsmith, Blue Whale, and Lindsell Train and that may be why it hasn’t performed quite as well since it started almost five years ago.

    It seemed to have a very poor year in 2016 when it started — up just 3% while the MSCI World did 29%. Admittedly it only launched at the Feb 2016, but it still seems to be playing catch-up a little. It looks like it will end its first five years up 90% or so, just behind a global tracker like the Vanguard World ETF.

    I didn’t see any mention of a benchmark in the documentation I looked at, which is a little concerning, but I didn’t dig very deep so I may just have missed it.

    I did notice the brochure mentioned the fund used a “stop-loss discipline” and the website says “we don’t believe in buy-and-hold” so I suspect the portfolio turnover could be quite high.

  15. Those who are wary of LTI – I agree the premium is offputting, though it was at par last year for a while – you do need to be patient (also given the illiquidity).

    Some of you may know the investment classic, ‘Where Are the Customers’ Yachts?’ by Fred Schwed. Owning a big chunk of Lindsell Train seems a way of playing this i.e. don’t be the customer – be the business.

    The NAV has not been as stellar as usual in the past couple of years – probably due to their AUM not moving much (it was racing up beforehand) and this is the biggest factor to watch out for.

    Otherwise I think of it as their ‘best ideas’ portfolio – it is how they began and they own a ton of shares in it.

    It also has a very decent yield which more importantly has grown and compounded beautifully over time.

    I do see it’s not for everybody (the portfolio is highly concentrated) but I think it may be good for some people if bought at the right time.

  16. Thanks for your views on the Equitile fund. The point about lack of a benchmark is a good one; I should have picked up on that!

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