Riding the UK Equity Train: Finsbury Growth & Income Trust

Charles Hall, the head of Research at UK Broker Peel Hunt, posed a provocative question last week, asking which of the Nasdaq 100, S&P 500 or the FTSE had produced the best returns over the last 5-years?

The answer is the FTSE 100 with an +85.00% total return in that period (that’s price gains and the reinvestment of dividends, back into the index).

Yes, those stats surprised me too, but they also set me thinking about how investors could take advantage of this.

Given that the UK stock market is often overlooked in favour of, and overshadowed by, its US peers, might we find some opportunity in a backwater of the UK equity scene, in this instance, Investment trusts?

With that in mind, I give you the Finsbury Growth & Income Trust FGT LN managed by the veteran Nick Train of Lindsell Train. One of the 5 funds under his remit.

The fund is differentiated from its peers, thanks to its highly concentrated positions and focus on what it sees as world-class companies. In fact, there are just 19 stocks in the portfolio. None of which is on a demanding PE, with Financial Services, Consumer Cyclical and Industrial sectors accounting for the biggest weights.

FGT doesn’t invest in small, speculative startups; instead, it holds significant positions in well-established companies listed on the London Stock Exchange. For example, Sage is a top-five holding, which was recently bolstered by the launch of AI-powered accounting tools developed with Microsoft and AWS, and Nick Train is vocal about the long-term prospects of these companies.

Trade Winds

UK equities are increasingly subject to bids from both overseas competitors and private equity companies; indeed, one of FGT’s core holdings, Schroders SDR LN, was recently bid for by US asset manager Nuveen, in a £9.90 billion all-cash deal that is likely to close in Q4 2026.

The bid price of 612p represented a +30.0% premium for Schroders shareholders, slightly below the average premium of +33.0% seen in UK bids during 2026.

The UK investment trust sector has become a target itself, with activist investors such as Saba Capital looking to take advantage of what’s seen as antiquated management and discounts to net asset values (NAV) that are far too wide.

FGT has an NAV of 869.40p as of the end of July, versus a share price of 807p, and a market cap of just over £808.0 million. The discount to NAV of -7.25% is not wide by industry standards, and it’s kept in check by an ongoing share buyback, which was recently renewed by the trust’s shareholders.

Performance

FGT’s stock has rallied by more than 100p since the end of March lows, just under 707p.
Its recent peak was 831 pence, posted at the end of July, though we have seen pull back from there in recent trade.

Of course, the trust’s stock price has been much higher over the last two years, reaching 940p in both June and September 2025. To get back there, I think we will need to see a continuation of the bid interest in UK stocks, which, to be honest, shows no sign of slowing, and the activism in the UK investment trust sector itself.

Perhaps the biggest boost it could receive would be an end to the polarised and on-off rotation between the AI and Software sectors, which would benefit its holdings in Sage and the LSEG.

Pros:

FGT is a UK-centric quality growth fund with a value tilt. The trust should benefit from ongoing UK M&A and activism within the Investment trust sector. The discount to NAV is likely to remain tight thanks to share buybacks. The portfolio churn is limited as Nick Train is a long-term investor in the truest sense, with some holdings dating back to 2007. Many of the trusts’ stocks have enjoyed high single-digit percentage gains in the last week.

Cons:

Long-termism could be seen as a weakness in current markets, where returns are increasingly generated by short-term narratives and trends such as data centres, chips, etc. A reluctance to cut what might be thought of as underperforming stocks and move on. UK focus limits the investment universe and exposure to mega-cap growth stocks/hypescalers, etc. (though some may view this as a feature, not a bug)

Technical outlook

The stock has the potential to rally further, though to achieve this, we would need to see recent highs taken out. Perhaps the best catalyst for that would be a resolution to the ongoing US-Iran conflict and the economic stresses that’s caused. FGT is not overbought on the RSI 14 indicator, with a reading just below 64; indeed, it has only been overbought once in the last 12 months.

Fundamental outlook

The fund has a basket of quality stocks that are starting to be re-evaluated by the markets. Unilever is a prime example; as such, it should benefit from the structural tailwinds that have driven the FTSE 100 to recent all-time highs, ongoing M&A and activism in the trust sector. The stock has PE around 10.00 times earnings, and as we have noted, a discount to NAV of around 7.25%. Share buybacks keep that in check and help support the stock price. The fund’s coffers should soon be boosted by the proceeds from the Schroders bid, which will provide Nick Train with an opportunity to re-invest that money.