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Call Richard Cook: 07770 575 122

email: richard@theinvestmentandretirementcoach.co.uk

Lindsell Train Funds – time to sell?

Let’s get something right up front. I am not a regulated financial adviser and nothing I say should be treated as personal advice.

If you have been fortunate enough to hold the Lindsell Train funds over the last few years you will have benefited from some stellar performance. But is that about to change?

Read more to find out why I have recently switched out of the Lindsell Train UK Equity Fund and the Lindsell Train Global Equity Fund and into other funds in the same sector of the Hargreaves Lansdown Wealth 50 list.


When the Lindsell Train Funds were removed from the Wealth 50 list I wrote that it looked like an over-reaction and I could see no reason why clients who had benefited from their stellar performance should now sell. I stick by what I said at the time but I also said there were some fundamental problems with the funds and I would therefore keep them under close scrutiny.

So, what has changed?

Firstly, performance of both funds over the last six months has been poor. I never judge funds over such short periods, but it looks as if that poor performance is already causing other issues.

Both are huge funds which hold shares in a relatively small number of companies. Fine when they are attacting new money, but not so good if they start having redemptions and have to sell shares.

These are both funds which have attracted large amounts of new money over recent years based on their stellar performance. Much of that is “hot” money chasing top performance which will leave just as quickly if that performance suffers. As we found from the Woodford debacle, once funds fall out of favour and redemptions increase things can deteriorate very quickly.

Already, one of the major investment research houses has significantly downgraded the Global Equity Fund, on liquidity concerns, as £600 million has been withdrawn since June.

I am not for one moment suggesting that another Woodford type debacle is on the horizon, but I do think there are very good reasons for thinking that the managers will find it very difficult to maintain their stellar performance as withdrawals accelerate and new money slows down.

On balance I now consider the risks of poor ongoing performance outweigh the rewards of ongoing good performance which is why I have decided to sell and move on to other funds.

If you have a basic strategy of only holding funds in the Wealth 50 list I can see no reason why the Lindsell Train funds should now remain an exception to that strategy. What this demonstrates is that however well a fund has done for you in the past you must have a monitoring process in place and be prepared to act when appropriate.

If this is something you would like to discuss in more detail ring or text me, Richard, on 07770 575122.

Once again this should not be treated as personal advice.  My aim is to help you develop the thinking processes which will help you make good investment decisions for yourselves.

 

IMPORTANT INFORMATION
This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122

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