Finsbury Growth & Income (FGT), Nick Train’s struggling investment trust, has issued a public warning after fraudsters cloned its website and LinkedIn page in an attempt to trick people into taking out fictitious loans.

In a statement on its website, the company said: “Finsbury Growth & Income Trust PLC (FGIT) has recently been made aware of a fraudulent entity impersonating our organisation. The impersonators have cloned our website, contact details, email address, and LinkedIn page, and are falsely claiming to represent FGIT in order to offer loans.

“We wish to make it absolutely clear that FGIT does NOT offer loans. If you have been contacted by anyone claiming to represent FGIT in relation to a loan or other financial services, please exercise extreme caution.”

It urged anyone who had been affected to report the incident to Action Fraud and notify the Financial Conduct Authority (FCA).

This is not the first time scammers have exploited the high profile of the company and Train, its lead fund manager. Last year The Times reported that messages purporting to be from the star investor had appeared on a WhatsApp group called British Stock Investment Association.

Digital winners

Ironically, the downside of the modern world’s reliance on online communication came as the fund manager emphasised his enthusiasm for UK “digital winners”, saying he could lift Finsbury Growth’s weighting to such companies above its current 60%.

Last month saw two of the top positions in this theme, accounting software provider Sage and publisher RELX slide 11% and 12% on concerns that their businesses could unravel as corporate customers rapidly adopt artificial intelligence (AI) tools.

Their decline contributed to another month of underperformance for the £1.2bn investment trust with net asset value falling 3.3% and the share price dropping 2% compared to a 0.9% rise in the FTSE All-Share. This widened the gap to the index, which gained 14.5% in the first eight months of the year while the trust’s shares have delivered just 0.7%, including two dividend payments.

“Their success has led investors to wonder whether established data or software vendors will be disintermediated by new AI-agents,” Train said of the AI fears in his monthly update.

Train said he and co-manager Madeline Wright had considered the issue and concluded that the strong brands of these companies and their reputation for accurate data created customer loyalty that translated to strong financial performance due to their subscription models. “And it is repeat business and long-term pricing power that underpins long-term investor returns,” he said.

Train drew a comparison between the consumer staple brands for which he is best known, such as Unilever, Diageo and Burberry, even though their weighting has fallen to around 29% compared to 49% five years ago. Over the same period “digital winners”, which also include Experian, London Stock Exchange Group, AutoTrader, Rightmove and Intertek, have jumped from 40%.  

“Put simply, there are parallels between a consumer who wants a pint of Guinness [from Diageo] and nothing else will do, and a solicitor who needs certainty that the legal precedent confirmed RELX’s LexisNexis service is accurate,” Train said.

However, the fund manager believed the digital companies could generate better returns of capital than consumer goods companies that had to move physical product.

“Frankly we believe the potential investment returns from companies that are beneficaries of, or driving, technology change, is so great, we may even consider increasing our exposure from here,” he said.

Bottom of the table

So far that strategic digital shift has not protected the trust’s shareholders from a profound style shift in the past five years that has seen the manager’s previously successful quality growth approach overtaken by formerly struggling “value” funds as inflation and interest rates have risen.

Finsbury Growth & Income currently trails at the bottom of the AIC UK Equity Income sector with a total return of 13.3% over five years that compares poorly to the group average of 79.3% that is just ahead of the 78% total return from the FTSE All-Share.

With few investors buying, the company has bought back 40% of its shares in the past four years in an effort to prevent the share price falling to a wide discount below net asset value. Nevertheless, the discount has widened to 6.7%, beyond the board’s 5% target, indicating the level of negativity towards the stock.

Winterflood, the trust’s corporate broker, said the prospect of a continuation vote in January, when shareholders could elect to liquidate the 99-year-old company, was probably preventing the discount from widening further.

It and the board will hope that Train’s long-term record will win the day. Since the manager took over 25 years ago the shares have generated an impressive 763.5% total return that trounces the All Share’s 295.3%.