Lindsell Train Investment Trust’s interim report, covering the six months to the end of September 2015, shows the fund moving to a significant premium. Today this is 34%. The Chairman’s statement reiterates previous warnings to new investors of the dangers of buying stock at very high premiums.
The net asset value just about beat the benchmark – returning 2.2% vs. 2% for the annual average running yield of the longest-dated UK government fixed rate bond (currently UK Treasury 3.5% 2068) plus a premium of 0.5% with a minimum yield of 4%. Both were ahead of global equity markets – the MSCI World Index fell by 10% over the period. The shares though rose by 17.4%.
The fund’s performance was driven by its holding in the management company – the value of this rose by 13% during the period, bringing it to 32% of the NAV. Its funds under management grew from £5bn to £6bn between end January and end October. Within the rest of the portfolio, Pearson has fallen by 36% year to date.
LTI : Lindsell Train warns on dangers of very high premium