LINDSELL TRAIN GLOBAL EQUITY B

This fund targets capital and income growth from a concentrated portfolio of equities. Management duo Michael Lindsell and Nick Train fund invest worldwide, but focus primarily on developed markets. As with their other funds, they buy what they view as durable, cash-generative business franchises and hold them for the long term. They find the bulk of these companies in the food and alcohol, internet/media/software, financials and healthcare industries. The portfolio mainly consists of larger companies and has historically carried an overweight to Japan.

Investment process

The fund aims to achieve capital and income growth over the long term by investing in a concentrated portfolio of global equities, primarily those listed in developed countries. Despite the focus on developed markets, the managers believe that a company's location can be irrelevant given the increasing level of globalisation. The managers look for durable, cash-generative businesses that will still be profitably in business in 20 years’ time. A sustainable high return on equity and low capital intensity are important fundamentals in identifying potential buys, before the managers calculate an intrinsic value relative to the share price. They believe that companies that are properly researched along these criteria offer relatively low risk, therefore they form a highly concentrated portfolio. This will typically be focused on consumer franchises, but will also include owners of intellectual property and marketplaces. Stock turnover is very low as the managers are relatively insensitive to changes in valuation, considering the quality of the business more important. The portfolio will typically look very different from the index so performance is likely to substantially deviate from its benchmark.