Nick Train relies on luxury holdings benefiting from the UK boom of the 1920s

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Nick Train, Finsbury’s Director of Growth and Revenue, looks to luxury brands and premium spirits makers to enjoy a resurgence as the UK enters a boom in ‘years crazy ”.

Speaking at Frostrow’s investment seminar last week, Train (pictured) remained optimistic about the outlook for the UK market which he says has even overtaken the Nasdaq this year.

“I don’t know if Pfizer is speaking, but I really feel delighted with the significantly improved performance of the UK stock market in 2021,” he said.

Train went on to say “maybe the world is experiencing some sort of roaring 20”. But rather than being dragged down by the reopening of the Covid business, he believes a period of “roaring consumer consumption” is due to “extraordinary trend of wealth creation by the new industries ”that have emerged through digital innovation.

“If there are going to be Roaring Twenties, it will be because new technologies create new wealth and new wealth is spent on luxury goods and services,” Train said.

Burberry and Diageo are part of the boom of the roaring twenties

He pointed out that Burberry’s top 10 is one of the luxury companies that could see a boost as people have more money to spend thanks to technology-driven growth.

Although the British fashion house, which accounts for 8% of the portfolio, was “absolutely crushed” last year during the Covid crisis, Train notes that the firm has shown it can bounce back from financial crashes. From its 2008 low amid the global financial crisis, Burberry’s share price has risen sevenfold in five years as confidence has returned and the global economy has recovered and Train expects she will do the same.

Burberry’s stock price has already risen 48.5% from its March 2020 low of 2107p, but it is still 10% below its mid-January 2020 high of 2329p.

On top of that, Train said investors did not appreciate the investments made by the current management team over the past three years to move Burberry’s products and image to the high end of the market. luxury, which he believes could start to pay off over the next two years.

See also: Nick Train braces for tough times as Finsbury’s growth and income hit by value turnover

Diageo, Finsbury Growth & Income’s biggest stake, is poised to be another beneficiary of “every roaring twent it can be,” Train said. The spirits maker, which represented 10.8% of the portfolio at the end of April, has seen its share price more than quadruple in the past 20 years.

While Train noted that consumers around the world are drinking less alcohol by volume, they are simultaneously choosing more expensive drinks, including those made by Diageo and another wallet holder, Remy Cointreau.

This is especially true in emerging Asian economies where premium beverage companies act as a “proxy for wealth creation”.

See also: Nick Train Fascinated by Coronavirus Alcohol Use Trends

LSE slows down performance

Although he remained positive on the UK outlook, Train said he was “less than pleased” by the more recent relative performance of Finsbury Growth & Income’s NAV, particularly over the past six or three years. last seven months.

The trust’s total share price return was 12.7% year-on-year, underperforming both the IT UK stock return by 40.8% and its benchmark, the FTSE All Share. , which returned 23.4%, according to FE Fundinfo.

Train attributed a poor performance to structural issues, as well as issues specific to equities, citing the London Stock Exchange as an example.

LSE went from the trust’s largest stake at the start of the year to the fourth-largest stake at 8.6% after its shares saw a fifth of their value wiped out.

Although investors initially backed its acquisition of Refinitiv, confidence in the $ 27 billion deal weakened after LSE revealed the integration would be more expensive and complicated than expected.

However, Train said the company is aiming for operating margins of 50%, which appear “to be credible aspirations for an acceleration in revenue growth from 4-5% to 5-7% over the next two years. “.

Train said the group has become “exactly the type of company that UK stock investors have complained about over the past three or four years of poor or disappointing UK stock market performance,” adding that as “data and analytics, it is” a very rare undertaking in the context of the UK stock exchange “.

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