Wednesday, 17 July 2019
Finsbury Growth & Income - Portfolio Sale
I have held this UK-focused investment trust in my portfolio since 2011 and have been more than pleased with the performance, returns and increasing flow of dividend income over the past 8 years. The start of 2019 has been no exception with a return of over 20% in the past six months.
However, alarm bells started to ring over the recent suspension of Neil Woodford's flagship £3.5bn Equity Income Fund and the relationship between a star manager and brokers Hargreaves Lansdown. Many thousands of ordinary investors in the fund have seen the value of their holding fall, a reduction in the dividend and are prevented from selling until at least the end of the year.
Of course funds and investment trusts are very different beasts. However there is always a balance between risk and reward, particularly in relation to equity investments. Nick Train runs a very concentrated portfolio of just 20 or so holdings with the top 10 accounting for 80% of the portfolio which means investors are exposed to quite a high degree of risk should just one or two of these holdings come a cropper.
HL has been in the FGT portfolio as long as I can recall and accounts for around 7% or 8% so the negative news surrounding the Woodford affair in recent weeks has resulted in the HL share price falling by 20% in early June. Not only does FGT have a significant holding in HL but HL clients hold 12.5% of FGT shares. This could be seen by some as giving rise to a conflict of interest, however unconscious or unintended from both sides.
Yesterday another portfolio holding, AG Barr (makers of IRN BRU energy drink) issued a warning on profits and their share price fell by 30%. This is a smaller part of the portfolio accounting for just 2.3%.
Last week the shares in Lindsell Train Investment Trust fell by 30% when HL announced it was dropping two related funds from its Wealth 50 list of favourites. They said this was due to a conflict of interest. Investors then experienced similar problems to the Woodford funds and faced a block on transfers out to other platforms.
Given that FGT makes up only 2% of my portfolio, it would not make a great deal of difference either way. However, for me the risk/reward balance has definitely shifted in recent weeks and after weighing up all the factors and given the share price stands at an all-time high point, I have decided to call it a day and sell my long-standing position.
One final reason for the sale, as a life-long supporter of Everton FC (since 1966), it irks me to see the holding of Manchester Utd. in the Train portfolio!
The sale price was £9.35.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!