Finsbury Growth & Income Trust — A further step-up in performance

Finsbury Growth & Income Trust (LSE: FGT)

Last close As at 12/07/2024

GBP8.48

9.00 (1.07%)

Market capitalisation

GBP1,496m

More on this equity

Research: Investment Companies

Finsbury Growth & Income Trust — A further step-up in performance

Finsbury Growth & Income Trust (FGT) has been managed by Nick Train since 2001. His strategy of running a highly concentrated portfolio (currently 20 names) – focused on just three business areas – has proved to be very successful, as illustrated in the 10-year relative NAV chart below. FGT has outperformed the FTSE All-Share Index over the last one, three, five and 10 years, helped by a recent step-up in capital appreciation, and has outpaced the performance of all of its larger-cap peers in the AIC UK Equity Income sector over these periods. Train remains optimistic about the outlook for selected UK equities, focusing on high-quality companies that can grow regardless of the stage of the economic cycle.

Melanie Jenner

Written by

Mel Jenner

Director, Investment Trusts

Investment Companies

Finsbury Growth & Income Trust

A further step-up in performance

Investment trusts
UK equities

13 June 2019

Price

894.0p

Market cap

£1,748m

AUM

£1,759m

NAV*

887.0p

Premium to NAV

0.8%

NAV**

889.6p

Premium to NAV

0.5%

*Excluding income. **Including income. As at 11 June 2019.

Yield

1.8%

Ordinary shares in issue

195.5m

Code

FGT

Primary exchange

LSE

AIC sector

UK Equity Income

Benchmark

FTSE All-Share

Share price/discount performance

Three-year performance vs index

52-week high/low

899.0p

740.0p

895.9p

735.0p

*Including income.

Gearing

Gross*

1.2%

Net*

1.2%

*As at 31 May 2019.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Finsbury Growth & Income Trust is a research client of Edison Investment Research Limited

Finsbury Growth & Income Trust (FGT) has been managed by Nick Train since 2001. His strategy of running a highly concentrated portfolio (currently 20 names) – focused on just three business areas – has proved to be very successful, as illustrated in the 10-year relative NAV chart below. FGT has outperformed the FTSE All-Share Index over the last one, three, five and 10 years, helped by a recent step-up in capital appreciation, and has outpaced the performance of all of its larger-cap peers in the AIC UK Equity Income sector over these periods. Train remains optimistic about the outlook for selected UK equities, focusing on high-quality companies that can grow regardless of the stage of the economic cycle.

FGT’s consistent long-term NAV outperformance versus the benchmark

Source: Refinitiv, Edison Investment Research

The market opportunity

Global markets have returned to more normal levels of volatility as investors grapple with macro issues, such as the disputes between the US and its trading partners. There is added uncertainty in the UK given the lack of a Brexit resolution, and as a result, UK equities look relatively attractively valued. This may provide an opportunity for investors with a longer-term time horizon.

Why consider investing in FGT?

Very strong performance track record – ahead of the benchmark and peers over the last one, three, five and 10 years.

High-conviction, long-term approach; portfolio turnover averages less than 5% pa, implying an average holding period of more than 20 years.

Progressive dividend policy; over the last five years the total distribution has grown at a compound rate of c 8% pa.

Regular share issuance to satisfy investor demand

FGT regularly issues shares to satisfy unfulfilled buy orders in the market. It consistently trades close to NAV; over the last 12 months, the trust’s shares have traded in a narrow range of a 1.3% premium to a 0.5% discount. The current 0.5% share price premium to cum-income NAV is broadly in line with the 0.5% to 0.6% range of average premiums over the last one, three and five years. FGT has a progressive dividend policy and offers a yield of 1.8%. The manager employs a modest level of leverage (net gearing of 1.2% at end-May 2019).

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

FGT’s investment objective is to achieve capital and income growth and provide shareholders with a total return above that of the FTSE All-Share Index. It invests principally in the securities of UK-quoted companies, but up to a maximum of 20%, at the time of acquisition, can be invested in non-UK quoted companies.

14 May 2019: Six-month results to 30 March 2019. NAV TR +2.9% versus benchmark TR -1.8%. Share price TR +2.4%.

28 February 2019: Announcement of first interim dividend of 8.0p (+11.1% year-on-year).

17 December 2018: Annual results to 30 September 2018. NAV TR +13.1% versus benchmark TR +5.9%. Share price TR +13.2%.

25 September 2018: Announcement of second interim dividend of 8.1p (+9.5% year-on-year).

Forthcoming

Capital structure

Fund details

AGM

February 2020

Ongoing charges

0.7% (H119)

Group

Frostrow Capital

Final results

December 2019

Net gearing

1.2%

Manager

Lindsell Train

Year end

30 September

Annual mgmt fee

Tiered (see page 8)

Address

25 Southampton Buildings,

London, WC2A 1AL

Dividend paid

May, November

Performance fee

None

Launch date

January 1926

Trust life

Indefinite

Phone

+44 (0)20 3008 4910

Continuation vote

None

Loan facilities

£75m (see page 8)

Website

www.finsburygt.com

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

Two dividends paid annually in May and November. The dividend is expected to rise over the longer term.

Renewed annually, the trust has the authority to purchase up to 14.99% and allot up to 10% of issued share capital.

Shareholder base (as at 31 May 2019)

Portfolio exposure by geography (as at 31 March 2019)

Top 10 holdings (as at 31 May 2019)

Portfolio weight %

Company

Country

Sector

31 May 2019

31 May 2018

RELX

UK

Consumer services

10.3

9.1

Unilever

UK

Consumer goods

10.2

9.2

Diageo

UK

Consumer goods

10.1

9.9

Hargreaves Lansdown

UK

Financials

8.6

8.1

Mondelēz International

US

Consumer goods

8.5

5.2

London Stock Exchange

UK

Financials

8.2

8.7

Schroders

UK

Financials

7.3

5.7

Burberry Group

UK

Consumer goods

6.5

7.6

Sage Group

UK

Technology

6.4

5.3

Heineken

Netherlands

Consumer goods

5.6

5.8

Top 10 (% of holdings)

81.7

74.6

Source: Finsbury Growth & Income Trust, Edison Investment Research, Bloomberg, Morningstar

Market outlook: UK shares relatively attractively valued

As shown in Exhibit 2, left-hand side, the performance of UK shares has lagged that of the global market, partly due to sterling weakness following the UK’s European referendum in June 2016. Global markets have returned to more normal levels of volatility, following a particularly benign period in 2017, due to a series of macro developments. During 2018, there were concerns about the pace and magnitude of US interest rate increases, which by Q418 had developed into worries about slowing economic growth, in part because of the trade dispute between the US and China. Shares rallied strongly in Q119 as there was greater confidence in the prospect of a trade settlement and the US Federal Reserve adopted a more dovish monetary policy stance; however, this was followed by a pullback in May 2019 on wider tensions between the US and its trading partners. The UK market has not been immune to these issues, and has also suffered significant outflows from international investors due to the lack of a Brexit resolution. As a result, UK shares are looking relatively attractively valued. Looking at the Datastream UK index, the current 12.3x average forward P/E multiple is a c 15% discount to the world market. This valuation is a 2% discount to the 10-year average; conversely, global equities are trading at a 7% premium. UK equities also offer an attractive 4.1% dividend yield, meaningfully higher than the 2.6% yield on the world market. For those investors who are seeking UK equity exposure and have a longer-term perspective, these valuation differentials may provide an attractive entry point.

Exhibit 2: Market performance and valuation

Performance of indices (last five years – £ adjusted)

Valuation metrics (as at 12 June 2019)

 

Last

High

Low

10-year
average

Last as % of
average

Datastream UK index

P/E 12 months forward (x)

12.3

15.7

8.5

12.6

98

Price to book (x)

1.5

2.1

1.3

1.7

87

Dividend yield (%)

4.1

4.8

2.7

3.4

120

Return on equity (%)

9.9

14.7

2.5

9.8

101

Datastream World index

P/E 12 months forward (x)

14.5

16.3

9.8

13.6

107

Price to book (x)

2.1

2.1

1.4

1.8

117

Dividend yield (%)

2.6

3.3

2.2

2.6

101

Return on equity (%)

11.4

13.3

4.9

10.8

106

Source: Refinitiv, Edison Investment Research

Fund profile: Very concentrated, long-term approach

FGT was launched in January 1926, and is listed on the Main Market of the London Stock Exchange. Since 2001, the trust has been managed by Nick Train (a founding partner of Lindsell Train Investment Management), who has more than 35 years’ investment experience. He aims to generate long-term growth in capital and income from a concentrated portfolio of typically c 25–30 primarily UK equities, although up to 20% (at the time of investment) may be invested in companies listed overseas. Ordinarily, 50–100% of the fund will be invested in FTSE 100 companies, and comparable companies listed on overseas stock exchanges, and at least 70% will be invested in FTSE 350 companies or their overseas equivalents. Gearing of up to 25% of NAV is permitted; at end-May 2019 it was 1.2%. Up to 10% of the portfolio may be held in cash, although Train prefers to remain fully invested. Performance is measured against the FTSE All-Share Index, although given the manager’s unconstrained and highly concentrated approach, the trust’s portfolio composition is very different from that of the benchmark. FGT has a very strong track record, with NAV and share price total returns significantly ahead of the benchmark and peers over the last one, three, five and 10 years. The trust has grown rapidly due to capital appreciation and ongoing inflows, and Train regularly invests his own money in the fund, illustrating the importance to the manager of having ‘skin in the game’.

The fund manager: Nick Train

The manager’s view: Importance of investing over the long term

FGT’s performance has been particularly strong in recent months, building on the trust’s long-term positive results. Speaking at a recent conference, Train said he feels ‘bewildered’ about the quantum and consistency of FGT’s returns, suggesting that it is unlikely they will continue on the same trajectory. However, he has delivered the same message at the last several FGT AGMs, and so far is yet to be proved right.

The manager says there are three aspects that create the potential for ‘different’ performance:

FGT has a highly concentrated portfolio of just 20 stocks, with more than 80% in the top 10.

The fund is only invested in three areas, which are the same as when Train started managing the trust in 2001 – currently c 50% in consumer branded goods, c 25% in media/software intellectual property owners and c 25% in stock market proxies.

The fund has low portfolio turnover, averaging 4.5% pa, which implies a holding period of more than 20 years. Since 2011, there have only been three new holdings, the last of which was Manchester United nearly two years ago.

Train stresses the importance of investing for the long term, hoping that FGT holdings turn into ‘100 baggers’ (shares that appreciate by 100 times), or 50 baggers or 10 baggers. He suggests that this outlook once seemed over-optimistic, but he now has increased confidence in the potential for these significant returns having read Christopher Mayer’s book 100 Baggers: Stocks that Return 100-to-1 and How to Find Them. The manager says that it is an ‘exhilarating book’, illustrating how relatively common it is for substantial US companies, ‘not speculative tiddlers’, to experience share price rises of up to 100-fold. Many of the companies identified could have been (or are) Lindsell Train investments, as they operate in the three areas that the manager favours, including Unilever (branded goods), Walt Disney (media) or Charles Schwab (stock broker).

The manager has analysed the share price performance of FGT’s holdings over the last 30 years. All of the companies are multiple baggers: 100x – Manchester United and Sage; 20–30x – AG Barr, Diageo, Heineken, Rathbones and Schroders; 10–20x – Burberry, DMGT, Euromoney, Hargreaves Lansdown, LSE, Unilever and Youngs; and 3–10x – Celtic, Fullers, Mondelēz International, Pearson, RELX and Rémy Cointreau. Train says that with patience, investors can generate considerable returns; he hopes to be running FGT for many more years and is confident that the number of the trust’s high-multiple baggers will rise.

Recent updates from portfolio companies are encouraging; the manager says that most of the fund’s underlying businesses are ‘doing very nicely thank you’, and he sees plenty of growth opportunities. Train says that it is implausible to describe Diageo as a young or tiny company; however, in 2018, its annual revenues were just 2% of global alcoholic beverage sales, and the firm is benefiting from the industry trend of lower volumes, but higher-quality alcohol consumption. Over the years, Unilever’s business has pivoted towards the beauty and personal care division. The company’s new CEO Alan Jope joined the firm 33 years ago when the personal care business was just 8% of total sales; this higher-growth division, which has above-average profitability, is now 40% of sales, and Jope comments that Unilever’s ‘deodorants will quadruple once we crack Asia’. Turning to stock market proxies, Train highlights a McKinsey report that says there is $88.5tn of assets under management globally, growing at double-digits per year, which suggests there is plenty of available capital for both passive and active fund managers. He says Schroders has just 0.5% of the global asset pool, and has good growth opportunities given its Asian distribution platform. Its stock price has appreciated by more than 20x since 1990, over which period the FTSE All-Share Index has not even quadrupled.

The manager highlights FGT’s position in Irn-Bru maker AG Barr, suggesting its recent annual results were perfectly satisfactory, with sales up just under 6% year-on-year (above-market growth), along with robust levels of free cash flow. He comments that AG Barr’s annual dividend rose by 7%, ‘following on from a proud history’. Train says that this company was one of the first ‘wonderful investments’ he bought when he took over running FGT in 2001. That year the beverage company’s average share price was 77p; it is now trading at c 950p per share, which the manager deems an ‘exceptionally pleasing return’. He suggests that there is no reason why the shares should not continue to deliver good returns for patient investors. Train says that AG Barr is an archetypal investment for FGT that can be owned for ‘years and years’.

Asset allocation

Investment process: Buy and hold ‘forever’

Train aims to buy great businesses with long-term growth potential, run by high-quality management teams, and which are trading at a discount to their intrinsic value; he then aims to own these shares ‘forever’. The manager seeks companies with the following attributes:

Durability – firms that can grow over the long term, regardless of the stage of the business cycle.

High return on equity – companies that can consistently generate high returns.

Low capital intensity with high free cash flow generation, which is able to support sustained dividend growth.

The three broad themes within the portfolio are global consumer brands, owners of media/software intellectual property, and capital market proxies. FGT is invested in just four of the 10 industry sectors (consumer goods, financials, consumer services and technology), and has no exposure to the other six, which together make up more than 45% of the index. In spite of its broadly large-cap focus, the trust’s portfolio has an active share above 90% (a measure of how a portfolio differs from its benchmark, with 0% representing full index replication, and 100% no commonality). Another of FGT’s key features is its low portfolio turnover, averaging less than 5% pa (just 2.5% in 2018). The manager tends to invest in very well-established businesses; the average age of portfolio companies is 152 years, and 11 out of the 20 holdings are family owned.

Train explains that if he were to start running the fund with a blank page, likely position sizes would be 6–7% in major liquid companies, 3–4% in less liquid firms, and 1–2% in smaller, exceptional businesses. He says that FGT’s current portfolio weightings are a function of its winning positions getting bigger, and it can take time to build up holdings in less liquid companies. The manager is keen to stress that he allows successful positions to run, rather than trimming them.

Current portfolio positioning

The consistency of FGT’s portfolio is illustrated in Exhibit 1; at the end of May 2019, the top 10 holdings were the same as a year before. However, it is interesting to note that the fund has become more concentrated, with the top 10 representing 81.7% of the total, compared with 74.6% at the end of May 2018. The trust has 20 primarily UK-listed holdings, with overseas positions in US-listed Mondelēz International and Manchester United, Netherlands-listed Heineken, and France-listed Rémy Cointreau. Over the last year, there has been very little change in FGT’s sector exposure (Exhibit 3), with higher weights in consumer goods (+1.7pp) and financials (+1.2pp) at the expense of technology (-2.3pp) and consumer services (-0.6pp). Around half of the portfolio is made up of consumer goods stocks, such as the two of the three largest positions Diageo and Unilever, which together are c 20% of the fund. In recent months the residual position in US soft drink company Dr Pepper Snapple was sold (the company is now a division of Keurig Dr Pepper). The other two disposals in 2018 were Fidessa (as a result of a takeover) and Kraft Heinz (a legacy position resulting from Kraft’s 2010 takeover of Cadbury). There have been no recent additions to the fund; the last new holding was Manchester United two years ago in 2017, following on from Rémy Cointreau in 2015 and Heineken in 2011.

Exhibit 3: Portfolio sector exposure vs FTSE All-Share Index (% unless stated)

Portfolio end-
May 2019

Portfolio end-
May 2018

Change
(pp)

Index
weight

Active weight
vs index (pp)

Trust weight/
index weight (x)

Consumer goods

47.2

45.5

1.7

14.4

32.8

3.3

Financials

26.8

25.6

1.2

26.2

0.6

1.0

Consumer services

19.6

20.2

(0.6)

11.7

7.9

1.7

Technology

6.4

8.7

(2.3)

1.2

5.3

5.6

Telecommunications

0.0

0.0

0.0

2.5

(2.5)

0.0

Utilities

0.0

0.0

0.0

2.6

(2.6)

0.0

Basic materials

0.0

0.0

0.0

7.7

(7.7)

0.0

Healthcare

0.0

0.0

0.0

8.3

(8.3)

0.0

Industrials

0.0

0.0

0.0

11.3

(11.3)

0.0

Oil & gas

0.0

0.0

0.0

14.3

(14.3)

0.0

100.0

100.0

100.0

Source: Finsbury Growth & Income Trust, Edison Investment Research

Performance: Very strong long-term record

Exhibit 4: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

FTSE All-Share
(%)

FTSE 350
(%)

MSCI World
(%)

31/05/15

16.1

16.3

7.5

7.4

16.8

31/05/16

2.3

2.0

(6.3)

(6.5)

1.3

31/05/17

25.4

26.4

24.5

24.4

32.0

31/05/18

12.0

11.2

6.5

6.5

8.8

31/05/19

12.1

12.4

(3.2)

(3.2)

5.9

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

In H119 (ending 31 March), FGT’s NAV and share price total returns of +2.9% and +2.4%, respectively, were ahead of the benchmark’s -1.8% total return. Positive contributors included Diageo, Mondelēz International and Sage Group, while the main detractors were Hargreaves Lansdown, Schroders and Manchester United.

Exhibit 5: Investment trust performance to 31 May 2019

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

FGT has generated very strong absolute and relative total returns over the long term. Over the last 10 years, in absolute terms, its NAV and share price total returns are +18.6% and +18.8% pa. The trust’s relative returns are shown in Exhibit 6. It has outperformed the benchmark over all periods shown, particularly over the last one, five and 10 years, helped by a very strong period of relative performance over the last three months, which is graphically illustrated in Exhibit 7. FGT has also outperformed the MSCI World Index over all periods shown, despite the outperformance of the dominant US market in recent years.

Exhibit 6: Share price and NAV total return performance, relative to indices (%)

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to FTSE All-Share

4.3

9.9

10.2

15.8

22.5

44.5

124.9

NAV relative to FTSE All-Share

4.3

9.9

10.5

16.1

23.0

44.9

120.5

Price relative to FTSE 350

4.3

9.9

10.2

15.8

22.7

45.1

126.6

NAV relative to FTSE 350

4.3

10.0

10.5

16.1

23.1

45.5

122.2

Price relative to MSCI World

3.7

7.5

12.2

5.9

3.5

3.9

60.5

NAV relative to MSCI World

3.7

7.5

12.5

6.2

3.9

4.1

57.3

Source: Refinitiv, Edison Investment Research. Note: Data to end-May 2019. Geometric calculation.

Exhibit 7: NAV total return performance relative to benchmark over three years

Source: Refinitiv, Edison Investment Research

Discount: Consistently trades close to NAV

FGT’s shares tend to trade closely in line with NAV. The current 0.5% share price premium to cum-income NAV compares to the range of a 1.3% premium to a 0.5% discount over the last 12 months. Over the last one, three and five years, the trust has traded at average premiums of 0.6%, 0.5% and 0.5%, respectively. Since 2004, the board has actively managed the discount/premium, purchasing shares when the discount exceeds 5% (no shares have been bought back since FY10) and issuing shares at a small premium when there are unfulfilled buy orders in the market. There is healthy ongoing demand for shares, evidenced by regular share issuance (Exhibit 1); during H119, 14.4m shares (8.3% of the end-FY18 share base) were issued, raising proceeds of £112.8m.

Exhibit 8: Share price premium/discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

FGT is a conventional investment trust with one class of share. There are currently 195.5m ordinary shares outstanding. The trust has a £75m multicurrency revolving credit facility with Scotiabank Europe, with an option to increase it by a further £25m (at a rate of Libor +1.05% pa); the facility expires in October 2019 and is expected to be renewed. Net gearing at end-May 2019 was a modest 1.2%. Train is not keen on taking on too much debt given the highly concentrated nature of FGT’s portfolio, and says that the trust’s attractive returns have been achieved without employing a lot of leverage.

Manager Lindsell Train is paid an annual management fee of 0.450% of FGT’s market cap up to £1bn and 0.405% of market cap above £1bn; no performance fee is payable. Frostrow Capital, the trust’s Alternative Investment Fund Manager, provides company management, secretarial, administrative and marketing services, and receives an annual fee of 0.150% of the trust’s market cap up to £1bn, and 0.135% of market cap above £1bn. In FY18, ongoing charges of 0.67% were 4bp lower than in FY17, and in H119 they were 0.70% (in line with H118).

Dividend policy and record

FGT pays semi-annual dividends in May and October. It has a progressive distribution policy, aiming to grow the annual dividend at a rate higher than UK inflation. The 15.3p per share paid in respect of FY18 was +7.7% year-on-year (1.1x covered); this increase is broadly in line with the 7.8% five-year compound annual growth rate. For FY19, the first interim dividend of 8.0p per share is +11.1% year-on-year; this higher increase has been made to reduce the disparity between the first and second interim dividends. FGT focuses on total return rather than income, but currently offers a 1.8% dividend yield.

Peer group comparison

Exhibit 9: Selected peer group as at 12 June 2019*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount
(ex-par)

Ongoing
charge

Perf.
fee

Net
gearing

Dividend
yield

Finsbury Growth & Income

1,748.4

11.7

62.9

88.9

457.0

0.4

0.7

No

101

1.8

BMO Capital & Income

327.9

(1.2)

42.0

49.0

175.5

(1.5)

0.6

No

101

3.5

City of London

1,582.9

0.6

28.1

34.4

204.8

1.4

0.4

No

109

4.4

Diverse Income Trust

339.3

(6.6)

17.3

36.4

(7.7)

1.1

No

100

4.0

Dunedin Income Growth

404.6

6.5

41.8

30.1

185.5

(8.0)

0.6

No

108

4.6

Edinburgh Investment

1,151.3

(8.0)

8.2

24.9

204.7

(13.2)

0.6

No

109

4.7

JPMorgan Claverhouse

399.5

(4.0)

36.8

38.8

185.6

(5.7)

0.7

No

115

4.0

Law Debenture Corporation

715.0

(2.6)

37.6

38.5

222.4

(6.7)

0.5

No

108

3.1

Lowland

368.1

(11.3)

22.3

19.1

281.4

(5.6)

0.6

Yes

114

4.4

Merchants Trust

535.4

(8.7)

33.5

21.1

177.5

3.3

0.6

No

115

5.3

Murray Income Trust

548.7

6.2

41.9

33.6

195.1

(5.7)

0.7

No

103

4.0

Perpetual Income & Growth

725.1

(9.2)

3.9

12.1

184.0

(14.4)

0.7

No

115

4.8

Temple Bar

829.2

(4.6)

29.3

25.6

195.5

(4.5)

0.5

No

111

4.1

Average (13 funds)

744.3

(2.4)

31.2

34.8

222.4

(5.2)

0.6

108

4.1

Trust rank in selected peer group

1

1

1

1

1

3

5

12

13

Source: Morningstar, Edison Investment Research. Note: *Performance data to 11 June 2019 based on ex-par NAV. TR=total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

In Exhibit 9, we show the 13 largest trusts in the AIC UK Equity Income sector (25 funds), with market caps above £300m. FGT has a very distinguished performance record; its NAV ranks first over all periods shown, and is 14.1pp above the mean over the last 12 months, +31.7pp over three years, +54.1pp over five years and +234.6pp over 10 years. The trust is one of three that are currently trading at a premium. Its ongoing charge is modestly higher than the average, but no performance fee is payable. FGT has a below-average level of gearing and dividend yield, although the low yield is unsurprising given its focus on total return rather than income.

The board

There are six directors on FGT’s board; all are non-executive. Anthony Townsend re-joined the board on 1 February 2005 and assumed the role of chairman on 30 January 2008. The other five directors are: David Hunt (appointed on 6 July 2006), Neil Collins (appointed on 30 January 2008), Simon Hayes (appointed on 29 June 2015), and Kate Cornish-Bowden and Lorna Tilbian (both appointed on 26 October 2017).

General disclaimer and copyright

This report has been commissioned by Finsbury Growth & Income Trust and prepared and issued by Edison, in consideration of a fee payable by Finsbury Growth & Income Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Finsbury Growth & Income Trust and prepared and issued by Edison, in consideration of a fee payable by Finsbury Growth & Income Trust. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a) (11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on Finsbury Growth & Income Trust

View All

Latest from the Investment Companies sector

View All Investment Companies content

Research: Healthcare

Cantargia — Full Phase I data presented at ASCO

Cantargia presented full data (n=22) from the Phase I part of the CANFOUR study at ASCO on 2 June 2019. These data (safety, biomarker and early efficacy data) were consistent with the interim data presented previously and so did not have an impact on the share price. The recent directed share issue (March 2019) raised SEK106m (gross) primarily from long-term institutional investors. This will fund the Phase IIa part of the CANFOUR study, expansion of the most promising subgroup, initiation of a new US study and efficacy study preparations. Our valuation is slightly higher at SEK2.62bn, but lower on a per share basis at SEK36.0/share.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free