Lindsell Train and Scottish Mortgage among the cheapest global trusts relative to their recent history

By Tom Aylott, Reporter, Trustnet, 13 October 2022:

Global trusts were some of the biggest benefactors of the growth wave that dominated throughout the 2010s, loading up on US tech companies that soared.

In the past five years alone, the IT Global Equity Income and IT Global sectors have delivered investors a total return of 30.3% and 21.4% respectively.

However, both the sectors have suffered from the rotation towards value this year, with IT Global down 20.8% and IT Global Equity Income falling 7.7% in 2022…

Here, Trustnet reveals the IT Global and IT Global Equity Income trusts trading at more than a 2 percentage point discount to their five-year average…

Lindsell Train is currently selling at the biggest discount relative to its five-year average, with investors able to grab the portfolio 29.6 percentage points cheaper than its five-year average price…

James Carthew, head of investment companies at QuotedData, said the trust was “bathing in the success” of Nick Train’s strategies for many years, but that too much relies on the shoulders of one man.

Not only does it possess a lot of “key man risk”, but the large premium was inflated by an unsustainably high volume of inflows, which is now balancing out as investors sell their holdings in the trust.

Carthew added: “We have long argued that, while the management company was undervalued in the NAV, Lindsell Train should not have achieved the massive premium heights that it did. At its peak, Lindell Train’s premium was approaching 90%, which was far too high in our view.”

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