Have star fund managers lost their sparkle

Nick Train, the prominent stock picker behind the Finsbury Growth and Income Trust, has faced significant challenges recently. During a shareholder meeting, he acknowledged a dire performance over the past five years, attributing it to external market pressures rather than a failure in his strategy. The trust reported a 6 per cent decline in share price, juxtaposed with the 24 per cent rise in the FTSE All-Share index during the same timeframe. This represents a stark contrast and raises questions about the efficacy of his investment choices.

Train’s current strategy focuses heavily on large UK-listed growth companies that he believes possess world-class potential. His major holdings include Sage, Experian, and the London Stock Exchange Group, which collectively account for 46 per cent of the trust’s net assets. Recently, these companies have experienced significant market sell-offs due to investor concerns regarding the disruptive impact of artificial intelligence on traditional data and information sectors.

Despite the turbulence, Train remains committed to his philosophy of backing firms he views as resilient in the face of technological change. He contends that these companies hold valuable data and intellectual property, positioning them favourably compared to their less-prepared counterparts. This belief is underpinned by a long-term view, as Train asserts that artificial intelligence can ultimately enhance rather than hinder their business models.

Investor sentiment has been mixed; while some remain supportive of Train’s approach, recent performance metrics have raised alarms. A significant voting outcome at the meeting indicated that only 1.2 million votes were cast against the continuation of his strategies, signalling some degree of confidence in his long-term perspective. Nevertheless, the trust’s position as the worst-performing UK equity income entity over both one and five years cannot be overlooked.

As the markets react to increasing technological advancements, Train’s steadfast adherence to his investment principles will be put to the test. The outlook thus hinges on his ability to adapt without losing the essence of a strategy nurtured over multiple decades.