Fund managers Nick Train (above left) and Michael Lindsell (right) have committed to work for another seven years, giving their army of investors the clearest indication yet how long they will be around to look after their money as a partnership.

The disclosure, contained in annual results from the Lindsell Train (LTI ) investment trust, comes as the pair ramp up succession planning at their firm Lindsell Train Limited (LTL), which they co-founded 22 years ago. It also comes as the business struggles with its first sustained period of poor investment performance since launch.

 The £225m trust, which owns 24.3% of LTL, said Train and Lindsell were ‘in good health and remain strongly committed to LTL. They are supported by increasingly mature and experienced investment professionals, currently numbering five, all of whom are taking on more responsibility and contributing more to investment decisions as their careers progress within the company.’

It means Train, 63, and Lindsell, 62, will be close to 70 by the time they stop running the global, UK and Japan funds for which they have become famous. 

As part of a gradual handover to a new generation of executive, Michael Lim, a director of the firm for 21 years, is passing on the role of chief operating officer to Joss Saunders, who joined in May last year.

The trust said the boutique was also looking to lift its 25% cap on remuneration as a proportion of costs in order to pay and incentivise the up-and-coming executives, whose numbers had grown from 19 to 25 in the last 12 months. 

The five-strong investment below Train and Lindsell are James Bullock, manager of the most recently launched Lindsell Train North American Equity fund, along with deputy managers Madeline Wright and Alexander Windsor-Clive and analysts Ben van Leeuwen and Alice Li.

Train and Lindsdell’s distinctive approach of picking concentrated portfolios of durable consumer franchises has served investors very well over the years. However, market conditions have become much more difficult for them in the two years since the pandemic. 

A combination of rising interest rates and inflation have subdued prospects for their holdings, while their relative performance has suffered from not holding energy and financial stocks which have rallied in the market’s rotation to value, and from surging oil prices.

In the year to 31 January LTL suffered outflows of £1.9bn as investors withdrew money from the Lindsell Train open-ended funds and institutional managed accounts, reducing the firm’s funds under management by 7% to £21.2bn from £22.8bn.

The biggest hit came in the UK where £1.2bn was withdrawn followed by Global, where £478m was pulled, and Japan which shed £177m.

Although the investment trust’s chairman Julian Cazalet said LTL was confident of returning the business to growth, he warned LTI’s dividend might have to be cut in future if funds under management at its main holding continued to fall.

For the year to 31 March the fund management business powered a 6% increase to £53 per share in the trust’s ordinary and special dividend, putting it on a 4.8% yield.

However, the fall in assets meant LTL’s value fell from £469.6m to £398.8m, contributing to a poor year for the trust, which saw net asset value (NAV) fall 2.3% against the 15.4% rise in its MSCI World index benchmark. Its shares tumbled 20% as the previously highly-rated stock saw its premium evaporate in the downturn.

Lindsell Train trust is notoriously volatile. The latest data shows that although long-term performance remains exceptional with a 479% total return over 10 years, the past three years have seen shareholders in the trust lose 37.5%.

Recently the shares have restored a 7% premium. JPMorgan Cazenove analyst Christopher Brown said this looked expensive given most global trusts traded at big discounts to NAV and the style headwinds facing Lindsell Train’s fund remained. Train’s UK-focused Finsbury Growth & Income (FGT ) trust stands on a 6% discount after an 18% fall in the share price this year.

Brown welcomed the efforts to develop the LTL business and reduce the risk of Train and Lindsell’s departures. ‘But we still think the key man risk is very high and think it is likely that LTL would see large outflows in the event that one or both of the founders were no longer involved in the business.’