A stronger month for several core holdings has reinforced the investment case for established UK businesses with valuable data, recurring revenues and strong customer relationships.
Finsbury Growth & Income Trust returned 7.8% on a net asset value basis in July, compared with an index return of around 3.7%. The improvement brought the trust back to broadly flat for the year, although it remained behind the index on a year-to-date basis.
The stronger result was supported by a number of technology, data and information businesses. These companies have faced concerns over the potential impact of artificial intelligence, but recent trading updates suggest the technology could also create opportunities for established operators.
A key part of the portfolio’s positioning is the belief that companies with proprietary data and embedded customer relationships can use AI to improve existing products and develop new services. Rather than simply facing disruption, these businesses may be able to strengthen their competitive position by combining established information assets with new technology.
Several holdings have already started to demonstrate this potential. Software and data companies are integrating artificial intelligence into their products, using information already held within their businesses to improve efficiency, functionality and customer engagement. As artificial intelligence becomes more widely adopted, demand for accurate and specialist information could increase, supporting businesses that control datasets that are difficult to replicate.
The same principle applies to established online platforms. Strong user engagement, recognised brands and large customer bases can provide protection against new competition while also creating opportunities to introduce additional services. Some portfolio companies are already using artificial intelligence to expand their product offering and deepen customer relationships. These developments could provide new sources of revenue over time while strengthening the value of existing platforms.
The trust is also increasing its exposure to other data-focused businesses, reflecting the view that proprietary information could become increasingly important as artificial intelligence develops.
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.
