The Finsbury Growth and Income Trust has just celebrated its centenary in a period which has seen tremendous change politically, socially and technologically. Nick Train is a portfolio manager. He co-founded Lindsell Train Limited back in 2000 when it took over the management of the fund. Nick, welcome. Thanks indeed for joining us.
Give us an update as to where you feel you are in what is now a period where we're seeing big change. Not with the fact you've had 100 years of it, but where you stand at the moment. How do you feel about the fund?
I also just say I'm not 100 years old. The company is, but we have been responsible — I've been personally responsible for that investment trust for a quarter of a century, which is a quarter of the life of the trust, and I'm proud of that. I'm proud of that longevity. Performance has had its ups and downs over that quarter of a century, and the last two or three years have been quite challenging. But that's part and parcel of investment markets. And the question is what happens to the net asset value and the share price from here? And in answer to your question, I would say that I am instinctively and by design a bull. I'm optimistic. I find it hard to conceive how anybody could be an equity fund manager without being natively an optimist.
And I do think that some of the factors that have presented challenges to Finsbury's portfolio of late are in fact just as credibly analysed as huge opportunities for Finsbury's portfolio. So yeah, I mean maybe we might talk about artificial intelligence at some stage, but just putting AI in context. Here we are in the third decade of the 21st century and I think two things are abundantly clear. One is that tech generally is creating enormous investment opportunities and it's also at the same time creating enormous wealth in economies. Maybe that's not equally distributed around the world, but tech has created huge wealth and you can see that in consumer expenditure and the sort of things that consumers spend their income on.
Increasingly consumers are spending extra wealth on premium products, luxury products, heritage-rich products, and to me I'm essentially a believer that those trends of the last 25 years are going to continue, that tech is going to create more wealth and that that wealth in part will be spent on premium or luxury products. Now the more controversial proposition, and I need to put this here just to lay it out, is that Finsbury is today and has always been a UK equity investment trust. So we are looking within the context of the UK stock market to find businesses that we believe will give us access to those big overarching positive themes. The UK stock market until really quite recently has been a very, very disappointing index as everybody knows. It's been intensely frustrating for someone like me who's been a career-long UK equity guy. Now listen, one's got to be very, very careful about saying other investors are getting things wrong because other investors are smart and there's always two sides to any investment case. But my working proposition is that contrary to common belief, the UK stock market is in fact home to a number of truly world-class businesses that are offering clear access to some of those big global growth themes. So just to name two, and we can talk about them or come back to them. If you wanted to find a company in the world that was well positioned to exploit development in AI technology, I think anybody would acknowledge that Relx is such a company, that that is a globally significant business doing globally significant things with AI, serving very, very important industry verticals around the world. To name another, actually painful holding for us recently, but it doesn't detract from the proposition. We own Diageo.
Whatever anybody thinks about Diageo in the short term, Diageo is the world's biggest spirits company and owns the best brands in global spirits. That's been a tremendous investment for 27 out of the last 30 years. And probably it's going to be a fantastic investment in 27 out of the next 30 years. And again, it's a UK company. It's a significant business that interests us.
I want to dig down into both those areas, AI and consumer goods, in just a minute. But before we get there, I just want to talk about the last 25 years you've outperformed the market. It's been a really good return, but the last five years have been a little bit more difficult and you just had a continuation vote which you passed easily. Just explain what that does and how does that change anything for you? Is it just a question of more of the same?
It doesn't change anything for me personally or for our relationship with that investment trust. I think as an example of good governance, particularly after — and I've already acknowledged this — a period of performance that's not met my expectations and I know other shareholders' expectations, the board of Finsbury offered a continuation vote to its shareholders, saying actually nothing to do with me, but saying should this company, which happens to be 100 years old, should it continue from here or would shareholders like it to consider other options? And I have to say again, putting to the extent I can myself to one side of this, I'm so delighted that I think 97% of those shareholders who voted said resoundingly this company deserves to exist and should continue. Whether that means we're responsible for another 25 years, I have no idea. Whether we're responsible for another two years, I have no idea. It'd be quite nice to be responsible for another 25 years, 50 years of responsibility for an investment trust really does have a bit of a ring to it. But we'll see. We'll see.
Okay, let's pick up on these big theme areas. AI clearly is occupying a lot of column inches in the press. A lot of investors are worried about it. How are you approaching declines in shares of these companies you mentioned like Relx, and I know Sage is down, Experian and so forth down 30, 40, 50% over the last six months or so. How can you justify holding on to those? What is the situation you're approaching? How are you approaching the investment potential in these companies that seem to have fallen out of bed?
Well, one has to accept that there's volatility associated with an emergent new technology and I can understand why investors' sentiment to the opportunities might wax and wane. But I think it's very, very important. I think there are three things I would say about all of these companies that we're invested in. The first is that, I mean in some cases we've owned these for 20 years or longer. You remarked in your introduction there's been a lot of change in technology over the last 100 years. You know, there's been a lot of change in technology over the last 25 years. Actually, all of the companies that you've named have turned out to be beneficiaries of developments in digital technology over the last quarter of a century. Relx's business today is far bigger and far more profitable than it was in 2000. And the reason it's a lot bigger and more profitable is because it's been able to exploit developments in digital technology to make its products and services even more valuable. So at least at one bedrock level we can say that these companies have successfully negotiated these sorts of shifts in the past. I think the second thing to say is that the companies absolutely get this. They understand that AI is potentially a disruptive technology to their franchises, but they also, and I think anybody who is willing to spend time on this, look at what the companies are saying, look at what the companies are doing. They are utilizing artificial intelligence-powered tools to make their businesses more relevant and more profitable for their customers today. And you look at Relx's business, Sage's business, you can see an acceleration in the number of customers that they're winning and in their growth rates because they are successfully taking advantage of AI. So I think that there is a fine balance here. Pessimism about these businesses could very, very suddenly turn into euphoria. I rather hope that it does because we would like the share prices to recover. But I struggle to see today any clear-cut, definitive argument that says these companies are no longer relevant or will no longer be relevant to their customers. Quite the contrary.
It's interesting actually looking down the list of these businesses. You mentioned, we mentioned Relx and Experian and so forth and there's other companies like the London Stock Exchange, Auto Trader and Rightmove. Are they all on the same level, if you see what I mean, in terms of how they're going to be able to utilize AI? What's the dynamic going on that connects all those companies?
Yeah. The dynamic is that they're all digital businesses and have made tremendous successes of their position as digital businesses. At the heart of all of them is data and constantly growing data, and the companies have utilized developments in search engines, developments in technology to derive more and more insights out of that data and hence utility to their customers. I mean, Experian, it's a credit rating bureau, very, very deeply, deeply embedded in the workflows of its customers. Experian has also over the last five years built up a 200 million plus number of individuals, people around the world who voluntarily signed up to Experian and are willing to share their personal financial data with Experian. There isn't another data asset relative to individuals like that anywhere in the world. There's no way that an LLM could scrape that data. Experian has launched its own AI co-pilot, EVA it's called, which is helping those 200 million plus individuals make better financial decisions for themselves and their families. That is a new growth opportunity for that company derived from its multi-decade success of building up these data assets that we hope will drive significant profit growth going ahead.
So you mentioned a couple of big ones there. Are you buying any of those at the moment with those declines in shares, as I said, over the last six months between 30, 40, 50%? Is there an opportunity out there to get in now?
I think a once-in-a-generation opportunity is being presented to access those companies that turn out to be beneficiaries of AI. Absolutely. And I don't know that all of the ones we're invested in will certainly be successful, but I think enough of them will be for us to, I sincerely hope, create a lot of additional wealth for investors in Finsbury. Yeah, I think it's important to say this. The UK stock market, it has been a dull stock market. Lots of substantial companies, their share prices aren't very much higher than they were 10, 20 years ago. But I remember buying Relx at three pounds a share in 2003. It got to £40. Okay. Now, you're right, it's sold off. You can buy it now at £22, but this is a business that has created extraordinary growth and wealth for its owners. London Stock Exchange Group listed at, what was it, two pounds a share I think in 2002. We were buying it then. That went up to £120. Okay, it's back to 75. That's a hit. But people shouldn't lose sight of the fact that, again just to repeat, people think about tech, people think about data and they think about NASDAQ. They think about the United States, and understandably because that's where the biggest and most of the companies are. I'm just saying in fact in London there are a number of businesses that have truly world-class data sets, at least as good if not better than their US peers, and maybe that's an opportunity for a UK investor if you don't want to buy BP or British American Tobacco. Do you know what I mean?
