- The Lindsell Train IT plc Ord 75P has been the worst performer over the past 1, 3, and 5 years, returning losses of -1.54%, -39.48%, and -25.60%, and ranked among the lowest in the IT Global sector.
- Despite strong performance over the past 10 years, the WS Lindsell Train UK Equity Acc fund has returned only 1.44% over the past year, significantly below the sector average of 18.26%.
- The Lindsell Train Japanese Equity B Sterling Quoted GBP fund has underperformed consistently across the past 1, 3, 5, and 10-year periods.
In 2024, Lindsell Train funds, once highly popular with over £12.5 billion invested in their global and UK equity portfolios, have faced significant challenges. Since 2020, their funds have undergone a cycle of sharp declines and underperformance, shaking investor confidence.
After years of delivering strong returns, the funds have underperformed over the past five years, consistently lagging behind sector averages. This prolonged underperformance, combined with market volatility and the limitations of their concentrated investment strategy, has resulted in their total assets now standing at almost £9.05 billion.
Despite these setbacks, Lindsell Train continues to advocate for its long-term investment strategy, which historically delivered strong returns. Investors now face the question: should they maintain confidence in Lindsell Train's long-term approach or reconsider, given the recent downturn?
In this report, we analyse the performance of each of the 6 Lindsell Train funds over the past 1, 3, and 5 years, comparing their results to those of their competitors. We will identify how each fund has struggled to remain competitive, particularly since the outbreak of the coronavirus pandemic. To provide a long term assessment, we will also chart the performance of each fund for the past 10 years and compare this to the sector average.
About Lindsell Train
Lindsell Train is a UK-based investment management firm founded in 2000 by Michael Lindsell and Nick Train. Their investment philosophy is heavily influenced by a long-term, buy-and-hold approach, akin to Warren Buffett’s strategy, where the ideal holding period for a stock is "forever."
The firm values deep, thoughtful analysis over the more conventional data-driven methods. They emphasise old-fashioned research techniques like “reading books” and “thinking,” even maintaining a library in their office to support this approach. Their focus on investing in businesses with strong, enduring competitive advantages has historically delivered exceptional returns and cemented their standing in the investment community.
Lindsell Train Fund Performance Summary
Our summary analysis of the six Lindsell Train funds over the 1, 3, and 5-year periods up to 20th September 2024 shows that all the funds ranked at the bottom of their respective sectors.
Notably, each fund received the lowest one-star rating, reflecting consistent underperformance compared to their sector peers over the analysed periods.
The table below highlights the performance, sector ranking, and overall rating of the Lindsell Train funds over the 1, 3 & 5 years.
Lindsell Train Global Equity Fund
Launched on 16th March 2011, Lindsell Train Global Equity B Dis GBP is their flagship fund which aims to outperform the MSCI World Index by investing in a concentrated portfolio of global equities. The fund is one of the most popular in the sector with funds under management in excess of £4.1 billion.
Despite its popularity, the fund has underperformed over the past five years compared to its peers in the IA Global sector. One of the primary reasons is the fund’s heavy concentration in the consumer defensive and financial services sectors. These sectors have struggled to keep pace with the higher-growth areas, such as technology and healthcare, which have been driving much of the performance within the sector. By not having sufficient exposure to these high-growth sectors, the fund missed out on the broader market gains.
Another contributing factor is the fund’s limited diversification. With a concentrated portfolio of fewer stocks, the fund’s performance has been more sensitive to the underperformance of individual holdings or sectors. While this strategy allows for higher conviction in select companies, it also amplifies risk. When key sectors underperformed, the lack of broader diversification made it difficult for the fund to offset losses with gains from other areas.
Finally, market dynamics over the past five years have been driven by high-growth companies, particularly in the technology sector, which benefited from trends such as digital transformation and changing consumer behaviour. The Lindsell Train Global Equity Fund’s strategy, which favours well-established, defensive companies, did not align well with these market trends, further contributing to its underperformance. As a result, the fund delivered a five-year return of 16.20%, far below the IA Global sector average of 54.27%, ranking 382nd out of 391 funds.
Lindsell Train Global Equity 10 Year Performance
Despite experiencing underperformance in the past five years, longer term investors in the fund have seen extremely competitive returns. Over the past 5 years, the fund returned growth of 224.61% significantly more than the sector average of 150.51%, highlighting the benefits of time when it comes to successful investing.
Lindsell Train Investment Trust
Lindsell Train IT plc Ord 75P has experienced a significant downturn in its performance from June 2019 to September 2024, recording a steep decline of 50% in returns while the broader IT Global sector reported an average growth of 28.71%. This underperformance is notably tied to the fund's strategic focus on traditional industries and established markets, which have not adapted well to the rapid technological advancements and shifts in consumer behaviour that have defined recent market trends. The fund’s heavy allocation in sectors that have lagged behind emerging high-growth areas, particularly in technology and digital services, has been a critical factor in its recent struggles.
Despite the recent challenges, Lindsell Train IT plc Ord 75P has demonstrated strong long-term performance over the past decade, outpacing the sector with a return of 176.96% compared to the IT Global sector's 137.24%. This illustrates the fund's earlier success in capitalising on favourable market conditions and making strategic investments that initially aligned well with global economic trends. However, the fund's lack of agility in adjusting to the newer market dynamics, particularly the digital transformation sweeping across industries, has led to its recent underperformance.
Lindsell Train Japanese Equity B Sterling Quoted GBP
The Lindsell Train Japanese Equity B Sterling Quoted GBP Fund, launched in 1998, is a core international offering for the firm, managing nearly £68 million. The fund focuses on Japanese equities, holding major companies like Nintendo, Kao, and Obic Business Consultants. These firms are leaders in gaming, chemicals, and software, aligning with Lindsell Train’s strategy of investing in high-quality, market-dominant businesses for long-term growth.
Despite this, the fund has significantly underperformed its peers in the IA Japan sector over the past decade. In the past year, it returned just 2.39%, compared to the sector average of 14.89%, with even poorer results over 3- and 5-year periods, showing -15.35% and -16.78% respectively. These returns fall well short of the sector averages of 11.05% and 32.59%.
This underperformance raises concerns about the fund’s alignment with market trends. While its holdings are stable, they may not have fully capitalised on Japan's recent market momentum, particularly in growth-driven sectors.
Over the past decade, the Lindsell Train Japanese Equity fund has returned 101.88%, falling short of the sector average of 124.27%. This underperformance underscores the fund's difficulty in keeping pace with Japan's evolving market dynamics.
Finsbury Growth & Income Trust PLC Ord 25P
The Finsbury Growth & Income Trust PLC Ord 25P aims to deliver both capital and income growth by investing primarily in securities of UK-listed companies. Its objective is to provide a total return that exceeds the FTSE All-Share Index, with net dividends reinvested.
Managed by Nick Train, the Finsbury Growth & Income Trust currently manages £1.4 billion in assets. As identified in the graph below, over the past decade it has delivered solid long-term performance, with a 10-year return of 102.61%, comfortably outpacing the sector average of 67.04%.
Despite a strong long-term track record, recent performance of the Finsbury Growth & Income Trust has been underwhelming. Over the past year, the fund posted a negative return of -0.52%, significantly lagging the sector average of 18.76% and placing it last among the 18 funds in the IT UK Equity Income sector. The 3-year performance also disappointed, with returns of -1.18% compared to the sector average of 12.84%. Over the last 5 years, the fund saw minimal growth of 0.90%, again ranking at the bottom of its sector.
The fund’s underperformance over the last five years can be attributed to several key factors. Its highly concentrated portfolio, while a strength in certain conditions, left it exposed during market shifts. Notably, the fund lacks exposure to sectors like oil and mining, which have performed well in recent years, particularly during periods of inflationary pressures and rising commodity prices.
The trust was hit hard after September 2019, with the pandemic significantly impacting UK equities, especially in consumer goods, a major area of focus for the portfolio. Coupled with macroeconomic uncertainties such as Brexit and global volatility, the trust struggled to recover from these external shocks, leading to negative returns.
Despite these recent challenges, Nick Train remains steadfast in the trust’s long-term strategy, emphasising its historical ability to generate substantial growth over extended periods. While recent underperformance is notable, Train's confidence in his approach suggests a belief that the portfolio will eventually rebound as market conditions shift back in favour of the trust's core holdings.
WS Lindsell Train UK Equity Acc
The WS Lindsell Train UK Equity Acc fund, established in 2006, focuses on achieving long-term capital growth by investing in a concentrated portfolio of high-quality UK-listed companies. Its strategy revolves around selecting businesses with strong brands, durable models, and reliable cash flows. Notably, the top five holdings comprise 49.32% of the total portfolio.
The fund manages approximately £3.08 billion, a decline from £4.4 billion in 2023 and down further from the £5.9 billion it held before the pandemic. Since its inception, the WS Lindsell Train UK Equity fund has delivered notable long-term performance. As identified in the chart below, over the last 10 years, the fund achieved total growth of 102.61%, outperforming the sector average of 67.04% significantly. However, while the fund has historically performed well compared to its sector peers, like other Lindsell Train funds, its returns have weakened since March 2020.
Over the past 5 years, the fund recorded growth of 8.34%, falling short of the 32.76% sector average. Its 3-year performance was also poor, as the fund returned growth of 1.56%, well below the 9.18% sector average. The past year has been a particularly challenging time for this fund, as it returned only 1.44% and ranked 222nd out of 223 funds.
WS Lindsell Train North American Equity
The WS Lindsell Train North American Equity Acc fund aims to grow capital and income by outperforming the MSCI North American Index (GBP) over any 5-year period. At least 80% of its assets are invested in shares of North American companies, focusing on long-term returns. There is a risk to capital invested, and no guarantee that the objective will be met over any time period.
The fund currently manages £39.09 million of investors' money. Since its launch on 22nd April 2020 up to 20th September 2024, the WS Lindsell Train North American Equity fund returned growth of 89.60%. In contrast the sector average was 62.93%.
Despite its strong overall performance since inception, the funds most recent 1 year performance fell below the sector average. This past year the fund returned 11.97% compared to the sector average of 19.99%.
One of the key reasons for this performance is the fund’s focus on consumer-oriented stocks like PepsiCo and Disney. These holdings, while historically reliable, have experienced slower growth compared to the rapid returns seen in the technology sector, which has been a significant driver of the North American market in recent years.
Summary
In conclusion, while the Lindsell Train funds have delivered strong long-term performance over the past decade, outperforming their sector averages and achieving solid returns, the recent picture is less favourable.
Our analysis shows that all six funds have underperformed their respective sectors over the recent years. The concentrated investment strategy, which has historically served them well, hasn't favoured them during periods of market downturns and volatility.
As a result, investors must now weigh whether to continue trusting in Lindsell Train's strategy for future recovery or consider other options that might offer more consistent returns across differing market conditions.
Optimise Your Investments With Yodelar
There are thousands of fund options available for constructing a portfolio, but with most funds underperforming, many investors often experience disappointing returns on their investments.
At Yodelar, our portfolio development is rooted in years of exhaustive analysis of the universe of funds and managers. We consistently evaluate over 100 managers, tens of thousands of funds, and 30,000 model portfolios. This ongoing research reveals that only a small subset of funds and managers consistently outperform, with over 90% of portfolios containing chronic under-performers.
These data-driven insights inform our structured portfolio construction process, employing top-tier, proven funds within each asset class based on rigorous backtesting.
As an FCA-regulated firm, we prioritise advanced analytics to support our recommendations. Our objective is to provide independent advice and portfolio management that significantly boosts client returns through detailed research.
Through extensive due diligence on global funds, we identify leading managers we believe are best equipped to deliver consistent outperformance. This process allows us to craft optimised portfolios designed to maximise clients' growth potential within specified risk parameters.
Find out more - Book a no obligation call with a Yodelar Investments Adviser
