Train warns of potential 'period of underperformance' for concentrated UK Equity fund

Top five holdings make up 45%

In a recent update on his £7bn UK Equity fund, Nick Train has sought to prepare investors for a potential future 'period of underperformance' as a result of the high concentration of holdings in the vehicle.

Despite the strong performance of the top five holdings in the portfolio in May, the manager has said he is aware of the potential risk posed by the fact that these holdings make up 45% the fund's total assets. At the same time, the valuations of these stocks are close to all-time highs: in 2019 alone LSE is up 30%, Mondelez 27%, Diageo 19%, Unilever 18% and RELX 14%. The manager concedes that, although he remains optimistic on these stocks and the prospects for their share prices to go even higher, he has not been adding to these stocks of late. "Some of these holdings we cannot a...