It can be daunting as an investor pouring money into individual companies, even as an experienced investor. You’ve done your own research, know your preferred buy point, accept it may take some time for your shares to make a meaningful gain and yet mistiming your investment can make making money harder – at least in the short term.
To be clear most of my investments are in individual companies. I like conviction investing. I also enjoy reading through company reports and updates. That said, I think there’s a place for most investors to outsource some of their portfolio to professionals, especially if you aren’t an investment professional yourself or are working.
My investments in funds like Marlborough UK Micro-Cap Growth and Lindsell Train Global Equity (which I’m covering in this article) have added growth to my portfolio. Given I’ve usually focused on income, using a professional to find these companies has worked out relatively well.
There are two managers in particular whom I think invest in high quality companies on a global basis and have concentrated portfolios. The upside of that is investors can outperform the benchmark and passive funds, although it does make the funds a little bit higher risk, in theory at least. I’ve seen little evidence to date that they are risky. It also means it’s worth paying for their funds, as at least they have conviction and aren’t just effectively a tracker dressed up as an active fund.
The two managers won’t be surprising. They are amongst the best known of the UK fund managers and are Terry Smith and Nick Train. The funds I’m looking at are Fundsmith Equity and Lindsell Train Global Equity.
This £20bn global fund has been performing well, it has an annualised return of 18% which is well ahead of the benchmark. It has just 29 holdings. The fund is about two thirds US shares, with the UK the second biggest region at 14.5% of the fund. The three biggest sectors by a long way are consumer staples (30%), technology (29%) and healthcare (24%). These figures are from the July factsheet.
The top 10 holdings are:
- Philip Morris
- Novo Nordisk
- Estée Lauder
I’d say this is a fund that gives investors access to high quality global companies and I believe it should continue to do well.
Lindsell Train Global Equity
Another high performing global fund is this one. The fund has delivered a cumulative increase of 109.6% over the last five years. It’s more focused on the UK than the Terry Smith fund above. It holds 35.5% UK shares, 32% USA and 20% Japan.
Again consumer staples is the largest category accounting for 42% of the fund’s allocation. This is followed by communications services at 18.5% and financials at 14%.
- Heineken Holding
- London Stock Exchange
- Mondelez International
- Walt Disney
Apart from Intuit and Paypal the top ten investments in each fund don’t overlap. It’s clear there has been more than one way to make money in the markets in past years. I fully expect these managers, at the top of the game, to keep scoring for investors. I think both funds are well run, are concentrated and hold great companies.
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Thanks for reading. Please note I own shares in the Lindsell Train Global Equity fund.