Finsbury Growth & Income (FGT) shares slumped over 6% yesterday after a product launch by AI provider Anthropic caused a sell-off in its top four holdings: Sage, Experian, London Stock Exchange Group and RELX.

Anthropic, the $183bn developer of the Claude chatbot backed by Scottish Mortgage (SMT) and other Baillie Gifford trusts, said its new legal “agentic” tool could automate a range of work such as contract reviewing, compliance workflows, briefings and templated responses.

The news alarmed investors in data companies. Sage (SGE), the accounting software provider that was its biggest position at 31 December at 12% of assets, fell 10%.

London Stock Exchange (LSEG), FGT’s third biggest holding at 11.2%, tumbled 13%; RELX, the information and analytics company that lay fourth at 10.4% of the portfolio, plunged 14%; and Experian (EXPN), the credit scorer and second largest position at 11.6% of assets, dropped 7%.

HgCapital also suffers

FGT was the only faller in its UK Equity Income sector but was not the only investment company hit in the sell-off. Private equity fund HgCapital Trust (HGT), which specialises in business and accountancy software providers, fell 10% yesterday and is down another 8% today. At 372p, a 24-month low, the formerly premium-rated investment trust trades on a 32% discount to estimated net asset value of 551.9p per share.

Dan Coatsworth, head of markets at AJ Bell, said: “RELX makes significant sums from analysing data for legal firms but the scale and breadth of the sell-off in RELX and others reflects fears that Anthropic’s breakthrough in this area will soon spread. While these data businesses have made the argument that AI can be an opportunity rather than a threat, the market seems unconvinced.

“The concern will be that, at the very least, the emergence of tools like the one unveiled by Anthropic will reduce the margins these data-driven companies can achieve and in a worst-case scenario disintermediate them entirely.”

Pressure mounts on Train

FGT slipped another 1%, or 7p, to 724p this morning as LSE, Sage and RLEX retreated further although Experian edged up 0.5%.

The setback reduces FGT’s market value to £847m and worsens its position at the bottom of the UK Equity Income sector. The trust is the only one in its 19-strong group to have lost shareholders money over five years. Following yesterday’s decline, shareholders are sitting on a 5.7% loss with dividends included, against a sector average total return of 64.8% and a FTSE All Share advance of 79%. The 731p share price stands at an eight-and-a-half-year low.

The net asset value of the portfolio, which is the best measure of the fund manager’s contribution, has shed 1% over the same period. This follows a 7.6% drop in Train’s stock picks last year, the fifth consecutive year it trailed the All-Share index, with nearly 32% underperformance against the benchmark’s 24%.

Last month 97% of shareholder votes at FGT’s annual meeting backed the continuation of the 100-year-old investment trust. Train’s long-term track record remains intact given his strong performance in the two previous decades. Since he took over as fund manager in December 2000, shareholders have received a 706% total return up to the end of last year, more than double the FTSE All-Share’s 328%.

A “mortified” Train told shareholders he and deputy manager Madeline Wright had not “capitulated” and retained conviction in their concentrated portfolio. This included the theme of stocks possessing valuable proprietary data such as Experian, LSE, RELX and Sage which he believed would avoid the danger of disintermediation because they were so useful to their clients. Of Experian, he said it was “so embedded in [client] workflows that I can only compare it to Microsoft”.

This view is backed by Jamie Ward, former head of investment solutions at AJ Bell who used to manage the Oriel UK fund. Writing on substack, he said: “Even a sophisticated product such as Anthropic’s requires a substantial layer of professional services and local adaptation to be genuinely useful. A system built for France looks very different from one designed for Germany, reflecting divergent legal frameworks and regulatory nuances. Replacing such systems demands far more than better code. It requires deep institutional knowledge that incumbents have accumulated over decades.”

He added: “Seen through this lens, AI is less a disruptive force and more a tool for removing bottlenecks. Incumbents are already deploying it to work through customer backlogs and lift developer productivity by 10% to 20%. That translates into faster revenue recognition and, if anything, strengthens the high retention rates that make software businesses so attractive.”

Our view

James Carthew, head of investment company research, at QuotedData, said: “The development of agentic AI tools to handle data collection and analysis, and the automation of research/clerical tasks has long been predicted and had already been weighing on the share prices of these companies. These stocks were highly rated on the premise that their earnings are defensive and could continue to grow through market cycles. The Anthropic news brings this into question and may represent a permanent breach of their defensive moats. Time will tell, but this is a story that has further to run.”

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