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

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
Three ways to avoid a big Deliveroo-style flop
UK stockmarkets

Three ways to avoid a big Deliveroo-style flop

Deliveroo's IPO – the most exciting new stockmarket flotation for a generation – turned out to be a big flop. It needn’t have been, says Matthew Lynn.
11 Apr 2021
Investing in luxury goods: a sector set for years of galloping growth
Share tips

Investing in luxury goods: a sector set for years of galloping growth

Rising Chinese consumption and the advent of e-commerce are two long-term trends powering the premium-goods industry, says Stephen Connolly. That impl…
9 Apr 2021
Investors enjoy a stockmarket nirvana as rally remains in one piece
Stockmarkets

Investors enjoy a stockmarket nirvana as rally remains in one piece

Stockmarkets continue their seemingly unstoppable rise, with US stocks up 5.8% in the first quarter of 2021, while German and Japanese stockmarkets bo…
9 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
House prices: from boom to even bigger boom
House prices

House prices: from boom to even bigger boom

UK house prices have risen to new to record highs, says Nicole Garcia Merida. Demand continues to outpace supply, but continued low interest rates, th…
9 Apr 2021