Train: How I outperformed FTSE All Share during 2011

Lindsell Train founder Nick Train has revealed hefty positions in some of the more defensive stocks in the FTSE 100 helped him outperform the market substantially last year.

Train, who heads up the £340m Finsbury Growth & Income investment trust, saw the portfolio’s NAV increase by 5.8% over its last financial year to 30 September 2011, beating the FTSE All Share index loss of 4.4% over the same period.

The manager said a focus on blue chips, including drinks giant Diageo and consumer goods group Unilever, enabled the trust to deliver a positive return 10% higher than the benchmark.

Diageo is Train’s largest holding in the concentrated trust, worth 12.1%, while Unilever is 10.3%.

Heading into 2012, Train is focusing on companies which can grow their dividends despite the poor outlook for global growth, while he is also expecting an uptick in M&A to feed through to stocks.

“The macroeconomic headwinds are having serious ramifications for government bonds and currencies but the corporate sector is continuing to pursue its strategic objectives of delivering growth by doing deals,” said Train.
He said last year a total of 27,752 global M&A deals took place, up 5% compared to 2010. 

Within the portfolio, Train is also focusing on companies with strong brands, adding a 3% stake in beverage giant Heineken recently.

Of the trust’s 25 holdings, 18 stocks – or 85% of the portfolio – either maintained or grew their dividends over the past year, the manager said.