Nick Train is one of the UK’s most successful fund managers. His strategy boils down to buying good companies with high-quality brands, holding for the long run and – famously – spending as little time as possible worrying about the wider economy. However, the Covid-19 lockdown has been hard to ignore and in his commentary to the half-year results of the Lindsell Train investment trust (which has climbed by more than 600% over the past decade), he gives his views on prospects for his holdings in a post-coronavirus world.
Companies with a “digital growth story” have actively benefited from lockdown, notes Train, with payments processor PayPal and video-games giant Nintendo among the trust’s biggest gainers this year. However, the drinks industry – another of Train’s favoured sectors – has lagged. In other financial shocks “drinks companies have earned a reputation for being ‘defensive’”. But this time the likes of Heineken have suffered as pubs and restaurants have shut and people have socialised less.
The challenge facing all investors, notes Train, is that this year’s winners now have a lot of optimism baked into prices, but relief for depressed stocks may yet be some way off. “Tourism, live sport, festivals, pubs; when you get down to it: cities. All of these answer basic human needs and I expect will come roaring back. But when?” For now, the portfolio is about two-thirds invested in current or potential “digital winners”, with the rest “in the owners of beloved and trusted consumer brands”, which Train considers the right “strategic shape”.
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