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Nick Train: Choose wisely, don’t be swayed by markets
Fund manager Nick Train is the ultimate buy-and-hold investor. He tells Citywire how he keeps his cool and chooses stocks for the long run.
The fast paced environment of finance can make it a challenge to stick to your strategy but Nick Train, co-founder of Lindsell Train, is an experienced advocate of the ‘buy and hold’ approach to investing.
Train seeks high quality companies for long-term investment and many of his top holdings have featured in his portfolios since day one when he set up Lindsell Train, with Michael Lindsell in 2001.
He says: ‘We think longevity is a much underestimated criteria for what makes a good or bad investment.
‘We’re immediately interested in companies that have been around for a long time. If you find a company that has survived many decades, perhaps even centuries, and has prospered over the long run then that’s telling you something really important about the calibre of whatever it is the company does.’
How to pick stocks for the long run
The UK Equity fund has returned 39% over the past five years, to outperform the FTSE 100 index returns of 10.43%.
‘What we look for in particular are companies that own brands, as that tends to be what allows them to survive and prosper. So a big focus is constructing portfolios around companies that own great brands or really strong business franchises’, he explains.
He says Unilever is one of the holdings with strong brands he foresees having for the next decade.
‘Amongst UK quoted companies there are only a handful that have such a substantive and credible emerging market strategy as Unilever. It has long established positions in emerging markets which are going to drive growth probably decades to come.
‘The only reason we’d exit the company would be if they decide to sell their emerging market activities or if a mania develops for companies like Unilever and the shares went up so high and we felt we couldn’t justify owning them anymore. But we’d be really disappointed by that, we’d much rather earn steady compounded returns from the investment.’
The strategy means there aren’t many big moves in his holdings, but Train most recently increased his position in Heineken, which now makes up 6.54% of the portfolio.
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