Finsbury Growth and Income Trust is focusing on established UK-listed companies with strong market positions, valuable data, recognised brands and opportunities to increase recurring and higher-margin revenues.
Madeline Wright, deputy portfolio manager of Finsbury Growth and Income Trust at Lindel Train, said the portfolio is built around companies that the investment team considers to be outstanding businesses by global standards despite being listed in London.
Experian is one of the key holdings highlighted by Wright. The credit bureau has built a global data set covering 1.5 billion consumers and 201 million businesses, providing information used by lenders to assess credit risk.
The investment case extends beyond Experian’s traditional credit reporting business. Wright highlighted the company’s shift towards software and data products, which can be embedded more deeply into customer workflows and provide higher-margin, recurring revenues.
RELX has a similar characteristic through its ownership of specialist data across its risk, science and legal divisions. Its LexisNexis legal database contains 150 billion documents, with a further two million added each day.
Wright said RELX has increased annual revenue growth to around 7% since 2021, compared with approximately 4% previously. The portfolio manager sees further scope for growth as customers seek additional digital and AI-enabled tools built around RELX’s existing data.
The portfolio also includes companies where brands provide a key competitive advantage. Diageo was highlighted for its collection of premium spirits brands, including Guinness, Johnnie Walker, Crown Royal, Don Julio and Tanqueray.
The investment case for Diageo is linked to the strength and scarcity of its brands, alongside the potential for consumers to move towards higher-quality products even as overall alcohol consumption changes.
Fever-Tree provides another example of a company built around a specialist consumer brand. The company created the premium mixer category and is now the number one brand in tonic water and ginger beer in both the UK and US.
The US has become Fever-Tree’s largest market, while its joint venture with Molson Coors provides a potential route to broader distribution across the country. Wright said successful expansion could provide further revenue and profit growth.
The portfolio has also added Intertek and Clarkson, two businesses operating in specialist markets with established positions and significant barriers to entry.
Intertek is one of four major global testing and assurance companies. Its services cover manufactured and shipped products, with demand supported by tighter regulation and increasing requirements for information about products and supply chains.
Wright highlighted the company’s move from testing individual products towards broader end-to-end assurance services. These services can include verifying raw materials, assessing supply chains and providing certification and compliance expertise.
Assurance accounted for around 20% of Intertek’s revenue at the time of the presentation, up from 10% in 2015, providing an additional area for growth.
Clarkson is the world’s largest shipbroker and has developed a substantial database covering the global shipping industry. Its scale provides access to information, transactions and industry data across international maritime markets.
The shipping industry is becoming increasingly digital, with electronic trading and technology playing a greater role in transactions. Wright believes Clarkson’s existing data and industry position could support growth in digital services and data products as these become a larger part of the business.
Across the portfolio, the common theme is ownership of assets that are difficult for competitors to replicate. These include Experian and RELX’s data, Diageo and Fever-Tree’s brands, Intertek’s technical expertise and Clarkson’s global shipping information.
Finsbury Growth & Income Trust Plc (LON:FGT) invests in the shares of predominantly UK-listed companies, with the objective of achieving capital and income growth.
