Lindsell Train Founders Secure £23m in Dividends Despite Profit Drop

The founders of Lindsell Train, one of Britain’s prominent fund management firms, received £23 million in dividends last year despite declining profits and significant client withdrawals. Michael Lindsell and Nick Train, who are celebrated for their stock-picking prowess, have faced mounting pressure in recent years due to underperformance in some of their key funds.

Recent filings at Companies House reveal that the firm’s fee revenues dropped nearly 20 per cent to £69.1 million in the 12 months ending in January. This decline was largely attributed to a decrease in assets under management, which fell to £12.8 billion from £15.9 billion the previous year. The company stated that these fund outflows were “predominantly in response to relative investment under-performance”, resulting in a 16 per cent fall in pre-tax profits to £49.2 million.

Despite this financial downturn, the founders extracted substantial payouts. Dividends totalling £32.3 million were issued last year, with June and December payments combining to deliver approximately £11.5 million each to Lindsell and Train, who jointly own 35.5 per cent of the business alongside their spouses. In total, the company’s nine directors were remunerated with £10.3 million over the year, including £5 million allocated to one unidentified individual.

Lindsell Train was established 25 years ago by the duo, who garnered a strong following due to the impressive returns they delivered for investors over time. However, underperformance has dented their reputation recently. Nick Train admitted earlier this year to being at a loss for ways to apologise for the lagging results of the Finsbury Growth and Income Trust, a London-listed vehicle he manages.

The company saw a reduction in total dividends from £39 million distributed in the prior year. Its employee base consists of 30 staff members, with total staff costs amounting to £21 million, including salaries and benefits. Lindsell Train has declined to comment on its annual financial statements.

The financial challenges facing active fund managers like Lindsell Train highlight growing investor trends favouring passive investment strategies, which have further intensified the pressure on such firms.