Finsbury Growth & Income: an excellent example of why you should let your winners run and run
Nick Train’s Finsbury Growth & Income Trust finds top stocks for the very, very long term, says Max King.

When is it right to take a profit? The temptation to cash in lest the share price reverses is strong, but it conflicts with the age-old maxim of running your winners and cutting your losers.
Advisers and wealth managers often encourage profit-taking, as clients will hate the thought of profits disappearing much more than they relish the prospect of further gains. If the price goes on rising, the adviser was just being cautious; if it falls, they will look foolish and could be fired.
It pays to be patient
The best professional managers, however, do not trim successful holdings unless the share price becomes wildly overvalued or they foresee a change in the company’s fortunes. They regard focusing on the laggards and losers as a more productive use of their time than worrying about the winners.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The arch-exponent of this strategy is Nick Train, the manager of Finsbury Growth & Income Trust (LSE: FGT) for the last 20 years. The portfolio turnover of FGT last financial year was just 1.3%, and has on occasion been lower. Train quotes Peter Lynch, the great Fidelity investor, who said that “often, there is no correlation between the success of a company’s operations and the success of its stock over a few months or even a few years but, in the long term, there is a 100% correlation. It pays to be patient and to own successful companies.”
That patience is shown by the long term returns of some of FGT’s holdings. “Since 1988 Unilever’s share price is up 17 times, Diageo’s 16 times and the Daily Mail’s eight times, while the All Share index has little more than trebled,” notes Train.
Since 2001, the London Stock Exchange has risen by a factor of 22 while Fever-Tree is up 12.5-fold since 2014. Though Train wasn’t appointed till late 2000, these and other stocks have been held by FGT almost continuously since 1988. With just 25 holdings overall, some of these investments have grown large; the top five account for almost half the portfolio. The disadvantage of the very low portfolio turnover is that there is little cash available for new ideas. But Train’s criteria for investment are so tight that the field is limited anyhow. Train admits to kicking himself for missing some opportunities, such as Games Workshop. Still, Experian, the global credit-rating agency, Rémy Cointreau, Manchester United, and PZ Cussons have been added in recent years.
Train’s focus is on companies with longevity, strong brands and market positions, long-term growth, sustainable margins and cash generation. “If a company’s products taste good, buy the shares,” he says. About 80% of the portfolio is UK-listed, with Heineken, Rémy Cointreau and Mondelez, the owner of Cadbury’s, accounting for the rest. Two thirds is invested in consumer goods and services and 25% in financials (but not banks or insurance companies) such as the London Stock Exchange, Hargreaves Lansdown and Schroders. Sage, the dominant force in small-business accounting, is the only technology stock.
A Brexit bargain
Train is disappointed that FGT’s net asset value fell in 2020, ascribing it to the valuation of UK companies, such as Diageo (down 10%) falling behind those of comparable companies listed elsewhere, such as Rémy Cointreau (up 48%).
“I have a strong sense that the uncertainty surrounding the UK’s protracted divorce from Europe has discouraged global investors,” he says, “but a big uncertainty has now been removed.”
Furthermore, “underlying strategic progress has made almost all the companies in our portfolio more valuable today than they were at the start of 2020”, he reckons, “even if their share prices have not yet reflected that value”.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.
After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.
-
Money tips for the end of the tax year
The tax year will end on 5 April, and your annual allowances for 2024/25 will disappear with it. Here’s how to get your finances in shape
By Katie Williams Last updated
-
India's stock market decline wipes out $1.3 trillion in market value
More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?
By Alex Rankine Published
-
India's stock market decline wipes out $1.3 trillion in market value – can investors stay optimistic?
More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?
By Alex Rankine Published
-
Pensions revolution: how to profit from the trends shaping the UK pension system
The UK pension system is one of the biggest in the world. Big changes are under way, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?
Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
By Cris Sholto Heaton Published
-
How to generate income with fixed-interest investments
Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
By Max King Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Boaz Weinstein: the hedge fund ‘vulture’ swooping on the City
Profile Boaz Weinstein’s campaign to take over and transform “the Miserable Seven” London-based investment trusts has been routed – for now. The fight isn’t over yet
By Jane Lewis Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published