Nick Train has urged investors to have faith in a turnaround in Finsbury Growth & Income’s (FGT) fortunes as it faces its first-ever continuation vote this week.

In the December factsheet released ahead of the shareholder vote on the future of the £1bn UK equity fund, Train reiterated his confidence in the portfolio, which has suffered a steep sell off over the past five years due to its quality bias.

While the trust notched up another poor month, with the net asset value (NAV) unchanged in December and shares climbing just 0.2% versus a 2.2% return from the FTSE All-Share, he remained defiant about his stock picks.

‘We made no change in the portfolio weightings in your company in December, nor any disposals or additions of holdings and, what is more, there are none imminent,’ he said.

‘This means that investors, doubtless as bitterly disappointed by last year’s performance as me, must decide whether the current portfolio constituents are going to continue to perform poorly into the New Year and beyond, or if 2026 will bring some respite.’

While he did not specifically mention the continuation vote that will take place on Thursday, Train noted that if performance were to improve, it is ‘unlikely to be because of any marked change to the current portfolio’ but because of a recovery in the stocks he holds.

Investors have lost faith in FGT over recent years and the shares currently trade at a 5.5% discount following extensive buybacks of the cheap stock by the board.

However, Train is not deterred and said the portfolio ‘has the potential to perform much better’.

‘I believe it is comprised of excellent businesses, with great brands or franchises and, if the companies can execute on their growth opportunities, their share prices should follow,’ he said.

There have been large stock-specific developments over recent months, with Unilever spinning-off Magnum ice-cream into a separate London listing, and Diageo announcing the disposal of its stake in East African Brewery for $2.3bn (£1.7bn), equal to 19 times enterprise value/Ebitda.

Train said the Diageo deal was ‘well above the valuation investors place on the whole of Diageo’s business of 12 times’.

The deal will reduce Diageo’s debt and increase its exposure to spirits at the expense of beer, while also increasing exposure to the US which ‘seems the right direction of travel’, said Train.

‘The US looks set to remain the world’s most dynamic developed economy and, at least historically, as consumers have become wealthier they have spent some of their new wealth on premium spirits,’ he said.

While Diageo closed out a ‘terrible’ share price performance in 2025, tumbling 35%, Train said that the £16 per share price means it has still more than trebled over the past 25 years and delivered a 7.8% a year total return.

‘That beats the 5.5% per annum total return from the FTSE All-Share since 2000,’ said Train.

‘What will the next quarter of a century bring? We remain optimistic for the business, believing its semi-eternal brands can grow volumes around the world, providing cash flows that extend out at least as far as a long-dated government bond, with some inflation protection too.’

He said that type of longevity is ‘rare’ in stock markets and ‘very valuable’.

Another stock that suffered a tough year was London Stock Exchange Group, shedding 20% over the year. This was mostly over concerns about the impact artificial intelligence (AI)-powered competitors will have on its data and analytics business.

However, these fears may be overdone given the new partnership with Citibank that was signed in December and its own collaboration with OpenAI, the owner of ChatGPT.

‘There is a lot at stake here. LSEG is a highly profitable business already, with operating margins of 49%,’ said Train.

‘If LSEG’s revenues continue to grow more quickly than its costs, as has been the case of late, then that profit margin could rise further, driving growth and cash generation.’

Train admits that the digital growth companies, which make up over 60% of the portfolio, did not perform in 2025, but said the likes of Sage, Auto Trader, Experian, Relx and Rightmove all ‘materially grew their businesses in 2025 and that, if anything, the opportunity for future growth are even brighter’.

‘We hope we can capture the full benefits of that growth for shareholders in 2026 and beyond,’ he said.