Progeny has dropped its stake in the popular £6.3bn Lindsell Train UK Equity managed by Nick Train in favour of a move to Liontrust Special Situations. The managed portfolio service says it’s moved to the new fund because it felt too exposed by Train’s narrow portfolio and international focus.
“The Lindsell Train fund went against our process and what we wanted to see because it was highly concentrated and its international exposure just got a little bit bigger than we would have liked,” said Progeny Group investment manager Craig Melling.
One of Train’s signature tactics is to hold only a small number of stocks in his fund. In fact, the fund has made only three purchase investments in the past three years: Fevertree drinks, Experian and consumer goods group PZ Cussons.
Nevertheless, Lindsell Train UK Equity has returned 21.7 per cent growth over the past three years, while Liontrust – managed by alpha fund managers Anthony Cross and Julian Fosh – has delivered just 9.2 per cent over the same period. That’s a healthy return, certainly, but nowhere near Train’s fund.
So why the switch for Progeny? Well, it seems the group wanted to find a fund with a reputation for returns, but with a broader asset base. Not counting cash, Liontrust Special Situations holds 58 positions, while Lindsell Train has just 28.
Lindsell Train UK Equity is also permitted to invest more of its fund in non-British companies, something Progeny wanted to see less of. Liontrust Special Situations has to invest 90 per cent of its fund in UK-domiciled firms, while Lindsell Train can put up to 20 per cent of its fund into overseas firms. This has allowed it to take positions in companies such as the Dutch Heineken company and the US-owned parent company of Cadbury, Mondelez International. In fact, Mondelez represents one of Lindsell Train’s biggest holdings, at 8.3 per cent of the fund’s portfolio.
So although impressive returns are one thing, it’s clear Progeny wants to take the slightly more cautious route and put its money in the hands of a more diverse – and therefore hopefully less exposed – fund.