Asset manager Lindsell Train Limited has had its valuation written down resulting in Lindsell Train Investment Trust's (LTI) net asset value (NAV) falling 6.9 per cent in March. Lindsell Train Limited is the investment trust's largest holding, accounting for 46.8 per cent of its assets at the end of March. Lindsell Train Limited's assets under management fell from £22.5bn in July 2019 to £18.2bn at the end of March this year.
“The trust’s NAV fell 6.9 per cent, hit particularly by the fall in value of Lindsell Train Limited,” said Michael Lindsell , co-manager of Lindsell Train Investment Trust. “This month the board felt it appropriate to modify the earnings component of its valuation formula to fully capture the fall in Lindsell Train Limited's funds under management to £18.2bn at the end of March and its effect on earnings. The decision also reflected the sharp fall in the values of most quoted fund management companies.”
Mr Lindsell added that the global equity trust’s listed holdings had “fared well” relative to the performance of markets, but none would be immune to the economic fallout of the current crisis.
“The unprecedented nature of the disruption and the lack of any template to work from in recent history makes the ultimate effect difficult to predict," he explained. "All we can say is that our investment approach steers us away from capital intensive manufacturing businesses, those reliant on commodity prices to sustain revenues and those dependent on high operational leverage.”
The trust's NAV and share price total returns fell 11.1 per cent and 12.2 per cent, respectively, over the first three months of 2020 during which period MSCI World index fell 15.7 per cent.
Lindsell Train Investment Trust’s shares have traded at a huge premium to NAV in the past though this has collapsed over the past year. The shares briefly traded at a discount to NAV earlier this year but went back up to an 11 per cent premium on 15 April.
The recent equity market volatility has had an impact on the valuations of unquoted investments. Scottish Mortgage Investment Trust (SMT) and equity income funds run Mark Barnett, co-head of UK equities at Invesco, have had the value of unquoted holdings written down in recent weeks.
