FINSBURY GROWTH & INCOME TRUST

Investment Process

Manager Nick Train uses a detailed, bottom-up research process to select highly cash-generative businesses which have a consistency of earnings, are durable and are underappreciated by the market in the short term. Train believes that this durability makes investing in them less risky. He wants companies that can grow over the long-term regardless of the economic cycle, have a high return on equity and low capital intensity. They should also have high cash flow generation that can support sustained dividend growth. He also targets businesses with long histories. Indeed, the portfolio is made up of well-established business with an average age of 150 years and often with large family ownership. The knowledge that these businesses have survived all manner of historic turbulence gives Train confidence that they will continue to prosper and reward investors. Train believes that there are four broad themes within the portfolio that meet all his investment criteria – Digital Winners such as Experian, Luxury Brands including Burberry, Trusted Brands such as Unilever and Market proxies including Schroders. He takes large position sizes, with the top five stocks making up around 50% of the portfolio by value. Its biggest sector exposure is to Consumer Staples followed by Consumer Discretionary and Financials.