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At Lindsell Train Global Equity Funds are a popular investment in the UK and it’s easy to see why. Over the long term, it has produced good returns for investors.
But is it still a good choice for advanced ISA or SIPP investors? Let’s have a look.
Investment strategy
Lindsell Train Global Equity is a concentrated fund (holding only 20-35 stocks) that typically invests in high-quality companies or ‘compounders’. These are companies that consistently generate high returns on capital and are able to reinvest those returns for future growth.
I like the investment strategy here. It’s very similar to Warren Buffett’s approach to investing. It won’t work all the time, of course. But in the long run, I expect to see solid results thanks to our combined strength.
Portfolio ownership
Look at the investment fund, it contains an interesting mix of stocks. Here’s a look at the latest ownership data (as of the end of February).
There are several large businesses in the top 10 Holdings, including the likes London Stock Exchange, Diageoand Unilever.
However, there are a few things to note here. First, the fund has a large exposure to the Consumer Staples sector (41.4%).
Second, there is not much exposure to Healthcare (2.5%). And third, there is no Big Tech exposure in the top 10.
Putting all this together, I expect the fund to be very different from the broader stock market.
In a volatile situation, I would expect to outperform because of the importance of Consumer Staples and the presence of Big Tech.
However, the sting in the tail, it is in a raging bull market, it can underperform.
Performance
We can see this out / underperformance in the latest performance table.
In the year to the end of February (which was volatile), the fund returned 4.4%, outperforming its benchmark (the MSCI World index), which returned 2.7%.
However, during the five-year period through the end of February (where we saw a strong bull market fueled by Big Tech), the fund lagged the benchmark. Note that in 2021, when tech stocks are on the rise, the fund is behind its benchmark by a wide margin.
It still beats the benchmark since its inception, but not as much as before.
Fees
Finally, turning costs, they are cheap for actively managed funds. Now, the active fee is over Hargreaves Lansdowne only 0.51%. I see that as attractive.
My view
Putting all this together, my view is that Lindsell Train Global Equity is still a good choice for an ISA or SIPP.
I see it as a good ‘defensive’ hold. In other words, I think it can help add balance to a portfolio that has a lot of growth investments.
I wouldn’t invest a large percentage of my portfolio in the fund though.
Due to lack of exposure in some areas of the market, I would like to have many other funds/stocks for diversification.
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