Three great companies that will grow for decades
Professional investor Nick Train of the Finsbury Growth & Income Trust, explains his investment strategy, and picks three top quality companies to buy now.
Let’s agree the identity of a handful of great companies from around the world. I know there’s always room for debate about such qualitative matters and you and I might disagree about the qualities that constitute greatness.
But if I table these (all held in Lindsell Train portfolios): Diageo, Kao Corporation (Japan’s Unilever), Heineken, Walt Disney and Unilever itself, I think anyone – after due consideration of these companies’ histories and prospects – would agree they are all great businesses.
What is more – and this is important – if you’d produced the same list ten or even 20 years ago, they’d have been acknowledged as great businesses then too. They weren’t difficult to spot in 2000 or today.
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
It is also important to note that these “great” companies have been great investments over the last 20 years and longer. And when I say great, I mean that their share prices have often gone up many, many times over the decades. They have generally handsomely outpaced the local stockmarket indices they reside in. Take a look.
You would think then that investment was the simplest thing in the world. You just identify a few great businesses, buy their shares and then hold them forever. In fact, this is exactly the strategy we pursue for Finsbury Growth & Income Trust. This strategy is certainly neither original nor clever, but it has been effective for us over the best part of 20 years. Perhaps it will cease to be effective tomorrow – no one’s investment approach can be guaranteed to work in perpetuity – but we propose to stick to it.
Booze begets brand loyalty
We are wary of drawing firm conclusions about the long-term effects of the lockdown and virus. It is still too soon, raw and imponderable. But it seems not imprudent to make two observations. First, through the crisis consumers have remained loyal to beloved and trusted brands and perhaps no more so than with alcohol.
Diageo (LSE: DGE) owns Guinness, Johnnie Walker and Tanqueray. I can’t tell you what Diageo’s sales and profits will be for the next six months or six years. But I can tell you it is highly likely that those brands will still be enjoyed in 60 years’ time.
The same is likely to be true for Heineken (Amsterdam: HEIA) too. For a certain type of investor, us for example, you really don’t need to know very much more.
Next, the pace of technological change – already brisk – is accelerating. Some older great companies are being impaired by this process, while new great companies are emerging. In the UK, we continue to think RELX (LSE: REL), Reed Elsevier as was, is one of the best ways to participate in the changes we’re all experiencing.
The company provides crucial digital data and software services to the global insurance, legal and scientific communities. It is in fact one of the UK’s few great tech companies.
Nick Train is a highly recognised fund manager, currently the co-founder of Lindsell Train Limited and their chairman. He is the portfolio manager for UK equity portfolios and Nick has over 40 years experience in investment management. Nick’s other roles include 17 years at GT Management where he worked his way up to a Chief Investment Officer for Pan-Europe. Nick graduated from the University of Oxford with a degree in modern history. Nick contributes to MoneyWeek’s share tips.
-
IHT receipts hit record high – is it set to rise further?
HMRC is set to collect a historic number of IHT receipts between April 2023 and March 2024. We look at how you can stop the taxman eating into your inheritance.
By Vaishali Varu Published
-
Adidas, Nike or Jordans - could collectable trainers make you rich?
The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
By Chris Carter Published
-
Adidas, Nike or Jordans - could collectable trainers make you rich?
The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
By Chris Carter Published
-
The industry at the heart of global technology
The semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Three emerging Asian markets to invest in
Professional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
By Chetan Sehgal Published
-
What to consider before investing in small-cap indexes
Small-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
By Cris Sholto Heaton Published
-
Why space investments are the way to go for investors
Space investments will change our world beyond recognition, UK investors should take note
By Merryn Somerset Webb Published
-
Time to tap into Africa’s mobile money boom
Favourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
By Rupert Hargreaves Published
-
M&S is back in fashion: but how long can this success last?
M&S has exceeded expectations in the past few years, but can it keep up the momentum?
By Rupert Hargreaves Published
-
The end of China’s boom
Like the US, China too got fat on fake money. Now, China's doom is not far away.
By Bill Bonner Published