The uncertain market offers a buying opportunity, Nick Train tells investors

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Uncertainty in global markets could allow investors to buy shares of high-quality business, says Nick Train, one of the most famous managers of British funds.

The co-founder of Lindsell Train, which for two decades has generated fiercely loyal fans among retail investors, in a report to shareholders on Monday described sentiment in global markets as “cautious”.

“In these circumstances, I always remind myself of this paraphrase of the advice of the late great investor Sir John Templeton: ‘The best time to buy sound common stock is when things look most uncertain.’ That’s really great advice, ”Train said, referring the opposite American investor Templetonwho died in 2008.

“Often things don’t turn out as badly as people fear; but even if they do, owning a stake in a solid company is a good strategy to bring you to better days, ”Train added.

Comments appear when Train sought to reassure investors in the investment trust Finsbury Growth & Income, which he manages, after a series of dim profits.

Train said nearly £ 2bn had received “disappointing profits” over the past 18 months, and apologized to the investor for failing to provide acceptable performance. . . over the fact that now is not a trivial period. ” In its semi-annual report by the end of March, the company said its total return on stocks was -3 percent against a 4.7 percent rise in its FTSE All-Share benchmark.

Known for its patient bets on a small number of companies, Train favored major consumer businesses such as the beverage group Diageo, Oreo-based Mondelez and food and soap conglomerate Unilever, ahead of Train’s portfolio, which outpaced fast-growing technology groups during the start of the year. last year.

The train in December said another of the vehicles it drives Lindsell Train Investment Trusthas experienced “perhaps the worst period of relative investment efficiency” in two decades.

However, the huge sell-off of technology stocks since January has not helped push Train’s relative performance above the trust’s benchmark index as markets have been hit by concerns about rising interest rates, inflation and the war in Ukraine.

“The duration and consequences of the war are uncertain. There may be a speculative bubble in the stocks of technology companies. Inflation and interest rates may rise, ”Train said. “We don’t have much perspective on any of these issues that would give us an advantage in time to market.”

Over the past three years, Finsbury’s growth and revenue have declined. According to the Association of Investment Companies, the total return on trust shares for three years was -2.8 percent. However, investors in the confidence saw a nice return in the long run: the return was 186% over 10 years against 102% for the British Morningstar index.

Simon Hayes, chairman of the trust, said the portfolio was undervalued in the market. “The profits generated from our concentrated portfolio of high-quality stocks do not reflect the core strengths and performance of the companies we own.”

He said the long-term effects of Covid-19, the effects of declining central bank support for the economy and the war in Ukraine contributed to a “negative outlook on consumption, inflation and risk appetite.”

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