The Lindsell Train Investment Trust (LTI) announced its annual results for the year to 31 March 2024. The company saw a NAV total return of 2.1%, a significant underperformance of the MSCI World Index which returned 22.5%. Shares fell 19.8%, leading the discount to widen significantly. The company noted that the sharp widening of the share price discount to NAV was attributable to a combination of factors. These include a lower rate of annualised NAV total returns achieved since 31 March 2020 (6.4% per annum versus 14.4% per annum from 31 March 2001 to 2020), heightened competitive pressures within the fund management industry, outflows from LTL managed funds and a general widening of discounts within the investment trust sector.
Commenting on the results, chairman Rodger Lambert noted:
“For the third time in four calendar years LTL’s core strategies, Global, UK, Japan and North America, underperformed their comparative benchmark indices. The market’s direction has increasingly been dictated by a narrow range of technology companies. This has played into the hands of passive strategies, which have continued to take market share from all active managers including LTL. Whilst there is no knowing how long this phase can continue, we are reassured that the key business fundamentals of LTL’s portfolios, such as the average underlying return on equity of its companies, remains superior to the benchmark indices against which it is compared. In time these fundamentals should win through, bringing a sustained improvement in absolute and relative performance. Until that happens, it is understandable that, in such a competitive industry, some clients are attracted to today’s better performing strategies.”
Regarding the outlook, he continued:
“There is no doubt that the challenges which the company and LTL face are considerable but they are not intractable. Throughout this difficult period of performance LTL has kept true to its investment disciplines. It owns a limited number of holdings in great businesses which rarely, if ever change; this allows the underlying companies to do the job of compounding earnings and value over time. It is a differentiated approach that stands out against the crowd and is one that has generated above average return for LTL’s clients for significant periods of time in the past and the Board believes will continue to do so in the future.”
LTI : Challenges continue for Lindsell Train