Finsbury Growth & Income suffers another ‘disappointing’ year

Finsbury Growth & Income suffered a second consecutive year of underperformance after another disappointing fall in its net asset value (NAV).

The investment trust underperformed against the benchmark FTSE All-Share Index, in a year which had been ‘buffeted by a relentless series of economic and geopolitical shocks’, chairman Simon Hayes said. 

Finsbury Growth & Income saw NAV per share fall 5.8 per cent during the period, compared to a growth in the NAV of 10.6 per cent last year.

It meant the trust underperformed the benchmark FTSE All Share, which was down 4 per cent over the same period.

Finsbury Growth & Income’s share price performance has been choppy this year, falling 8.5 per cent to 800p in the 12 months to 30 September. 

Since then shares have staged a tentative recovery and are currently trading at around 845p.

The discount of share price to NAV widened to 5.7 per cent as at 30 September.

Fund manager Nick Train said: ‘It is disappointing to me to have to report on a second consecutive year of my underperformance of your company’s benchmark. 

‘It has been particularly frustrating, given that the business performance of most of the companies in the portfolio has met or exceeded my expectations. Sometimes this happens.’

Train pointed to the performance of portfolio companies Hargreaves Lansdown and Schroders, which have both seen their share prices fall by around 38 per cent this year.

This came ‘even though their businesses have grown, as measured by increases in customer numbers or assets under management’, Train added. 

He said: ‘I can only hope investor sentiment will improve towards the UK wealth management industry and, indeed, for the whole UK stock market.’

Hayes insisted the board continues to ‘fully support’ Train’s strategy which ‘has delivered attractive returns over the longer term and we believe firmly that this will continue to deliver strong investment returns to shareholders in the future.’

Train highlighted to an improvement in performance in the second half of the year, however.

‘For the benefit of my ego and, I hope, to cheer up readers… can I nonetheless note that my investment performance improved in the second half of your company’s financial year and outperformed – admittedly only dint of falling less than the weak UK stock market. I sincerely hope this recent trend continues.’

The best portfolio performers in the second half of the year included Diageo, the trust’s biggest holding, as well as Heineken, Mondelez and Sage.

Train said these are companies with ‘well-merited reputations for predictable cash flows generated from brands or business franchises that their customers are likely to continue patronising in all but the most adverse economic circumstances’.

And in better news for investors, Finsbury Growth & Income’s total dividend per share for the year increased from 17.1p to 18.1p.

Earlier this week, Train acknowledged a ‘disappointing’ two years for Lindsell Train investment trust, which he also manages. 

The trust has been weighed down by the performance of core holding Lindsell Train Limited, which accounted for 42.7 per cent of the trust’s NAV at 30 September.  

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

This was driven by £1.5billion of redemptions and £400million in falling market prices.

Lindsell Train Investment Trust saw a share price total loss of 6.5 per cent per ordinary share, while NAV fell 3 per cent in the six months to 30 September. 

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