Lindsell Train to boost ranks as assets swell and regulatory burdens kick in

Train Nick Lindsell Train 2014Lindsell Train is looking to add to its ranks as assets under management continue to swell and the burden of regulatory requirements becomes apparent.

The firm’s funds under management were up by £2.4bn to £11.3bn in the first half of the financial year to 31 July 2017, with performance adding 60 per cent and inflows 40 per cent.

The flagship UK Equity fund is now over £4bn, the Global Equity fund is over £3bn and the Japanese Equity fund increased by 40 per cent over the six months to £164m.

“This growth has been achieved without any increase in the number of staff,” chairman Julian Cazalet says. “There is, however, some increase in costs associated with the ever greater regulatory burden on the investment industry in general. Nevertheless this illustrates what a scalable business fund management can be, especially with a strategy that is concentrated on a number of low turnover products. Further growth will probably require some more investment in personnel.”

Lindsell Train has confirmed it will pay directly for third party research under the Mifid II regulations, but Cazalet warns that although the firm mostly uses its own in-house research, the new rules will create more work.

“The burden of monitoring, reporting and analysing trades will increase the administrative burden on Lindsell Train and is likely to require additional compliance support for no benefit and considerable extra cost.”

The Lindsell Train Investment trust now holds almost 40 per cent in Lindsell Train, which Cazalet admits could be detrimental if the markets fall.

“The value of the holding in Lindsell Train could suffer from any fall in markets or from fund withdrawals if performance were to deteriorate but the increased diversity of Lindsell Train’s clients, with growing support from wealth managers and IFA/retail platforms, should give the business more stability in either eventuality.”

However, manager Nick Train remains bullish in his outlook for the equity markets.

“Of course we can’t definitively prove to you that it is right to be bullish,” Train says. “But we can warn you to be suspicious of the sort of analysis of markets and economies that commonly talks of the maturity of the equity bull market or the late cycle characteristics of economic activity. We’ve all been familiar with such misplaced pessimism for many decades.”