Finsbury Growth & Income Trust, an IC Top 100 Fund, is among the top five UK Growth & Income Trusts in terms of net asset value and share price performance over three and five years, its returns far outstripping those of the FTSE All-Share index.
Its yield is one of the lowest in the sector but its aim is capital and income, with a total return in excess of the FTSE All-Share. However, the trust's portfolio is constructed without reference to a stock market index.
Fund manager Nick Train favours undervalued companies with strong brands or powerful market franchises, looking for attributes such as the ability to prosper through business cycles for many years; grow earnings every year; and generate earnings growth without making heavy balance sheet investment.
He holds shares for the long term regardless of short-term volatility, aiming for them to double or more in value over time. This results in extremely low portfolio turnover, which saves on transaction costs.
"Short-term returns may be volatile and should not be expected to be in line with the benchmark," comment analysts at Winterflood Securities. "The dividend cut in 2010 was clearly a disappointment, however we believe this fund remains well-placed to generate attractive total returns over time."
The trust levies a performance fee on the annual increase in market capitalisation, provided attainment of absolute return hurdle of increase in retail price index (RPI) inflation plus 6 per cent. However, this extra fee is capped at 1.25 per cent of market capitalisation and the trust's total expense ratio remains low at just over 1 per cent.
It also trades at a slight premium to NAV, as is the case with many trusts in this sector.
Read our interview with Nick Train
FINSBURY GROWTH & INCOME (GB0007816068) | |||
PRICE: | 348p | GEARING: | 107% |
AIC SECTOR: | UK Growth & Income | NAV: | 347.87p |
FUND TYPE: | Investment trust | PRICE PREMIUM TO NAV: | 1.74% |
MARKET CAP: | £225.82m | 1-YEAR PRICE PERFORMANCE: | 5.52% |
No OF HOLDINGS: | 26* | 3-YEAR PRICE PERFORMANCE: | 89.29% |
SET-UP DATE: | 3 January 1926 | 5-YEAR PRICE PERFORMANCE: | 22.73% |
TOTAL EXPENSE RATIO: | 1.01% | MORE DETAILS: | frostrow.com |
YIELD: | 2.71% |
Source: Morningstar & * Frostrow
Performance data as at 7 May 2012.
Top 10 holdings as at 31 March 2012
Diageo | 11.3 |
Unilever | 9.0 |
AG Barr | 7.3 |
Pearson | 7.3 |
Heineken | 6.7 |
Rathbone Brothers | 4.9 |
Fidessa | 4.9 |
Sage | 4.9 |
Schroders | 4.5 |
Kraft Foods | 3.7 |
Sector breakdown
Consumer goods | 42 |
Consumer services | 29.5 |
Finance - general | 18 |
Technology | 10 |
Other | 0.5 |