IN BRIEF: Lindsell Train trust underperforms index, proposes defences
Lindsell Train Investment Trust PLC - investment trust created by Michael Lindsell and Nick Train and managed by Lindsell Train Ltd that invests for long-term total returns while maintaining real purchasing power of capital in sterling terms - LTIT says it ‘materially’ underperformed its benchmark index in the financial year that ended March 31, as its net asset value falls. NAV per share at the end of March is 716.1 pence, down 25% from 952.1p a year earlier. NAV total return for the financial year is minus 21%, compared to a 16% gain for its benchmark, the MSCI world index in sterling.
Chair Roger Lambert notes the trust has little direct exposure to growth in artificial intelligence infrastructure and applications but has investments that were hurt by fears of AI disruption to software and data companies. Additionally, he says, ‘the strong performance over the last 12 months of energy companies, industrials and miners, as well as leverage financials including banks, has had an adverse impact on the company’s comparative performance.’ Lambert continues: ‘We recognise that our manager’s approach is designed to achieve results over the long term, and that such a distinct and highly concentrated portfolio will likely have difficult periods when it is out of favour, either because its companies are temporarily disadvantaged or because investor capital is directed elsewhere. The board challenges the manager at every board meeting on the continued relevance of its investment strategy, the quality of the underlying businesses owned by the company and their suitability as investments to achieve the company’s objective. It will continue to do so.’
Lindsell Train cuts its final dividend to 28p per share from 42p. The company pays no interim dividend.
LTIT says it will propose at its annual general meeting on September 15 to introduce a contingency process, in case the firm is left with no directors after ‘recent activity by activist investors’. The proposed amendments to the company’s articles of association would allow the automatic and temporary appointment or re-appointment of the minimum number of individuals to fill the vacancies, drawn from those who stood or were removed at a general meeting. The board would then be required to appoint new, replacement directors as soon as possible after the meeting.
Current stock price: £5.71
12-month change: down 32%
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