Nick Train: how investors should navigate Covid's winners and losers

The challenge facing investors, says fund manager Nick Train, is that this year’s winners have priced in a lot of optimism, but relief for depressed stocks may be some way off.

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”.

Recommended

The MoneyWeek Podcast with Russell Napier at the Library of Mistakes
Investment strategy

The MoneyWeek Podcast with Russell Napier at the Library of Mistakes

Merryn talks to Russell Napier about Edinburgh’s Library of Mistakes, the age of debt and financial repression, plus why he has never invested in Chin…
27 May 2022
Ocado faces a “crunch” year – should you buy or avoid?
Share tips

Ocado faces a “crunch” year – should you buy or avoid?

Ocado was one of the big winners from the pandemic as customers moved online. But now it’s struggling, and losses are growing. So, asks Rupert Hargrea…
27 May 2022
What to buy as the tech-stock bull market crashes
Tech stocks

What to buy as the tech-stock bull market crashes

The decade-long bull market in tech stocks has come to a rapid halt. Investors need to distinguish solid stocks from speculative ones rather than just…
27 May 2022
Will the rise of ESG investing cause stagflation?
ESG investing

Will the rise of ESG investing cause stagflation?

ESG investing is booming. But it may be contributing to today’s stagflation – slower growth and higher inflation – says Tom Traill.
27 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Should you be worried about energy windfall tax proposals?
Energy

Should you be worried about energy windfall tax proposals?

Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors…
24 May 2022