Finsbury Growth & Income suffers another ‘disappointing’ year

Finsbury Growth & Income underperformed for the second consecutive year after another disappointing drop in net asset value (NAV).

The investment trust underperformed the benchmark FTSE All-Share Index in a year that was “plagued by a relentless series of economic and geopolitical shocks,” said chairman Simon Hayes.

Finsbury Growth & Income saw NAV per share decline by 5.8 percent over the period, compared to NAV growth of 10.6 percent last year.

It meant the trust underperformed the benchmark FTSE All Share, which fell 4 percent over the same period.

The share price of Finsbury Growth & Income performance was choppy this year, dropping 8.5 percent to 800p in the 12 months to Sept. 30.

Since then, shares have made a tentative recovery and are currently trading around 845p.

The share price discount to NAV rose to 5.7 percent on September 30.

Fund Manager Nick Train said: “It is disappointing for me to report on the second consecutive year of underperformance against your company’s benchmark.

“It was extremely frustrating as the business performance of most of the companies in the portfolio met or exceeded my expectations. Sometimes this happens.’

Train pointed to the performance of portfolio companies Hargreaves Lansdown and Schroders, both of which have seen their share prices drop about 38 percent this year.

This came “even as their businesses have grown, as measured by increases in client numbers or assets under management,” Train added.

He said: “I can only hope that investor sentiment towards the UK asset management sector and indeed the UK stock market as a whole will improve.”

Hayes insisted that the board “fully supports” Train’s strategy, which “has delivered attractive returns over the longer term and we firmly believe that this will continue to deliver strong returns on investment for shareholders going forward.”

However, Train noted an improvement in performance in the second half of the year.

“For the sake of my ego and, I hope, to cheer up readers… I can nevertheless note that my investment performance improved in the second half of your company’s fiscal year and outperformed – albeit only by falling less than the weak UK stock market. I sincerely hope that this recent trend continues.’

Among the best-performing portfolios in the second half of the year were Diageo, the trust’s largest holding, as well as Heineken, Mondelez and Sage.

Train said these are companies with “well-earned reputations for predictable cash flows generated by brands or business franchises that their customers are likely to continue to patronize in all but the most adverse economic conditions.”

And better news for investors: Finsbury Growth & Income’s total dividend per share for the year rose from 17.1 pence to 18.1 pence.

Earlier this week, Train acknowledged a “disappointing” two years for Lindsell Train Investment Trust, which he also manages.

The trust suffered from the performance of core holding company Lindsell Train Limited, which as of September 30 accounted for 42.7 percent of the trust’s NAV.

Chairman Julian Cazalet said exposure had the biggest impact on performance, after NAV fell 10.4 per cent and assets under management fell by nearly £2 billion.

This was driven by £1.5bn in redemptions and £400m in falling market prices.

Lindsell Train Investment Trust saw an overall price drop of 6.5 percent per common share, while its NAV fell 3 percent in the six months to September 30.

The trust makes up 0.5 percent of Finsbury Growth & Income’s own portfolio.