Yes, the board at LTIT has regularly warned about this. In general, trusts will issue more shares to address large premiums but the circumstances of LTIT make this more difficult to do. They’ve said they don’t want to dilute the holding in the LT asset management company, which is what would happen if they issued more shares as they wouldn’t be able to buy more shares in the asset management company.

I don’t think that’s an unreasonable stance but it’s something shareholders (and potential shareholders) of LTIT need to appreciate as it can mean the premium moves around a lot.

This is the 2nd time I have read of such a warning from the mangers of this trust the other being back in June 2019 where the premium was even higher than it is now

Back then , I seem to remember it was reported Investors had got excited with the contents of Lindsell Train Limited making up near half of LINDSELL TRAIN INVESTMENT TRUST .

Does this extreme up and down of the premium not show poor management of the fund . I thought well run ITs had control measure

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.

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.

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.

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.