Lindsell and Train have joint responsibility for the new fund, which contains 20 to 25 of their best global stock ideas. Until now, their main focus has seen been UK and Japanese equities. But the global remit of the new fund is viewed as an extension of the global perspective they have taken to gain a better understanding of UK and Japanese equities.
The new fund will be managed in the same way as the Japan and UK equity portfolios, with a focus on exceptional businesses. Lindsell and Train will invest for the long term, buying and holding undervalued stocks rather than constantly trading the portfolio to capture short-term trends, which will keep costs down. As the portfolio is concentrated, the performance of every stock will count and they will avoid the dilution of returns that can occur when portfolios are over-diversified.
Lindsell and Train have managed the Lindsell Train investment trust, a global multi-asset closed-end fund, for nearly 10 years and also manage pure global equity portfolios for institutional investors. With the new fund, they wanted to provide a wider investment base of both institutional and retail investors with a pure global equity strategy.
The new fund is benchmarked against the MSCI World index but the managers are not overly concerned with benchmarks and believe that producing absolute returns is not dependent on taking a view on every stock in a typical global benchmark. They will not hedge currency exposure and currency views are ignored when constructing the portfolio.
Some investors may feel there are enough global equity funds already, but the management skills of Lindsell and Train will be the main attraction for others. An alternative may be Fundsmith’s global equity fund, which has a similar slant on global equities. It shares Lindsell Train’s unconstrained long- term buy and hold strategy, concentrated portfolio and lack of currency hedging.