Nick Train is one of Britain’s few remaining star fund managers. The investing veteran jointly manages the popular Lindsell Train Global Equity fund and is the lead manager of Finsbury Growth & Income Trust and Lindsell Train UK Equity. Train has a proven track record of achieving market-beating returns through his stock picking. That’s even after a whopping 39 years in the industry. With that in mind, I think investors would do well to take note of the expert’s top picks.
Fund manager’s favourite stocks
Among the companies Train likes best are those in the consumer goods industry. For example, Unilever and Diageo are two of the core holdings in Train’s UK equity fund. In fact, the fund has a 47.8% sector allocation to personal goods, food producers, and beverages. Some of the companies include AG Barr, PZ Cussons, and Fever-Tree. In general, consumer goods companies tend to prove resilient in spite of poor economic conditions, meaning they’re wise investments for the current climate.
Train also favours companies with healthy balance sheets and no debt. Such companies are undoubtedly better positioned to hold up during a crisis thanks to their strong financial position. As such, the fund manager has taken a shine to the asset managers Hargreaves Lansdown, Rathbones, and Schroders, pointing out their conservative balance sheets and positive cash piles.
Companies with loyal customer bases and reliable subscription revenues are also among Train’s top picks. Among these include information and analytics company Relx, software firm Sage, and the London Stock Exchange. Train points out that all three “benefit from being able to charge their customers at regular intervals for continuing services that by and large those customers need to stay in business”.
The long-term buy-and-hold strategy
Ultimately, Train’s Buffett-style buy-and-hold strategy has proved to be a major success. Evidently, this simple and straightforward approach to investing has certainly paid dividends. Moreover, I reckon UK investors would do well to replicate Train’s strategy in order to realise their own set of attractive returns further down the line.
Overall, ignoring market sentiment and focusing on buying shares in quality UK companies is a tried and tested method of building serious wealth. Holding them for the long term, while disregarding the temporary market downswings, also means you won’t be tempted into timing the market. Many of the companies that make up Train’s UK equity fund have been there since its inception in 2006, illustrating just how effective the buy-and-hold strategy really is.
In sum, I’d pay close attention to the stocks held by the UK’s top fund manager while looking out for more firms with sustainable business models, strong market positions and well-established brands. After all, I reckon shares in these companies are the best to buy now.
Matthew Dumigan has a position in the Lindsell Train Global Equity fund. The Motley Fool UK has recommended AG Barr, Diageo, Hargreaves Lansdown, PZ Cussons, Rathbone Brothers, RELX, Sage Group, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.