Morningstar downgrades Lindsell Train Global Equity fund due to recent performance and geographic biases

From Morningstar: 2024-07-17 09:04:00

Morningstar analysts believe that the Lindsell Train Global Equity fund has a distinct investment philosophy and experienced managers, but execution has been lacking. While the fund offers defensive qualities, recent performance has suffered due to geographic biases and stock-specific issues. The fund’s Process Pillar rating was downgraded to Average, while the People Pillar retains an Above Average rating.

Co-founders Michael Lindsell and Nick Train bring over 30 years of experience to their global equity strategy, joined by co-manager James Bullock. Their investment philosophy centers on high-quality, cash-generative businesses, with strong fundamental analysis driving stock selection. A highly-concentrated and unconstrained approach is taken, with regional deviations and sector biases in play.

Key metrics for the Lindsell Train Global Equity fund include a Morningstar Medalist Rating of Bronze, Morningstar Rating of ★★, and total assets of £4.3 billion since its inception in 2014. The team is considered well-resourced, with expertise in company strategy and intellectual property valuation. The fund’s concentrated portfolio seeks to hold stocks for the long term, but recent underperformance is linked to select holdings facing challenges.

Recent performance of the Lindsell Train Global Equity fund has lagged behind benchmarks, with some positions contributing to the negative impact. Japanese holdings in consumer staples, as well as stocks like Diageo and Brown Forman, have faced setbacks. However, other holdings such as Nintendo and Intuit have performed well. Net outflows have impacted the fund, with assets standing at around £8.6 billion. Monitoring capacity and the fund managers’ execution of the investment process remains crucial.



Read more at Morningstar: Morningstar Downgrades Nick Train’s Global Equity Fund