Troy Trojan – August 2020 fund update
Kate Marshall | Tue 18 August 2020
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- We like the simple philosophy behind this fund, with the potential for long-term growth and a focus on limiting losses in weaker markets
- Manager Sebastian Lyon is part-owner of Troy Asset Management so we think he's incentivised to perform
- He also has a good team of analysts around him to provide support on this fund
- This fund is on our Wealth Shortlist of funds chosen by our analysts for their long-term potential
How it fits in a portfolio
Rather than trying to shoot the lights out and perform strongly at all times, Troy Trojan aims to grow investors' money steadily over the long run, while limiting losses when markets fall. It tries to experience less ups and downs than the broader global stock market or a portfolio that's mainly invested in shares. As a result, it could form the foundation of a broad investment portfolio, bring some stability to a more adventurous portfolio, or provide some long-term growth potential to a more conservative portfolio.
Manager
Sebastian Lyon has managed this fund since its launch in 2001, using the same investment philosophy that was founded when Lyon helped to set up Troy Asset Management. He has also managed Personal Assets Trust since 2009 – this is an investment trust that is invested similarly to Troy Trojan.
Lyon is also CIO (Chief Investment Officer) of Troy Asset Management. This position takes up some of his time, but he's previously handed over some of the day-to-day company management responsibilities to capable colleagues. This leaves him to focus more of his time on investment management. Lyon also has support from Charlotte Yonge, who was appointed the fund's co-manager in 2018 and carries out analysis across a range of assets. Overall we think Troy is home to a stable investment team.
Process
Lyon likes to keep things simple. He aims to shelter investors' wealth just as much as grow it.
To do this, the fund is constructed around four 'pillars'. The first contains large, established companies Lyon thinks can grow sustainably over the long run, and endure tough economic conditions. He has tended to focus on companies based in developed markets, such as the UK and US. This includes some of the world's best-known companies with highly recognisable brands, such as Microsoft, Unilever and Nestlé. The manager has the freedom to invest in higher-risk smaller companies as well, but the fund hasn’t had much exposure to this area of the market for several years.
Last year, Lyon reduced exposure to shares to one third of the fund. He felt many share prices looked expensive and company earnings might not be strong enough to help prices grow much further. Investments in companies such as UK accounting software company Sage were sold from the fund. The manager later took advantage of share price falls in February and March this year by investing in companies at more attractive prices.
The rest of the fund is made up of investments that could bring some stability to the portfolio during more difficult markets. The second pillar is made from bonds. 27% of the fund is currently invested in US index-linked bonds, which could shelter investors if inflation rises. 14% of the fund is also invested in traditional UK government bonds (gilts).
The third pillar consists of gold-related investments, including physical gold, and accounts for 13%. Gold often acts as a safe haven during times of uncertainty, or could perform well if inflation takes off or key global currencies weaken. The final pillar is cash, where 7% of the fund is held. This provides important shelter when stock markets stumble.
While the fund contains a diverse range of investments, it is concentrated. This approach means each investment can contribute significantly to overall returns, but it can increase risk.
Culture
We like that Troy's fund managers are dedicated to the same investment philosophy that was established two decades ago. The group has always been clear about the way its range of funds are managed, and the managers don't stray into overly complicated areas of investment markets. Wealth preservation is key, and each manager adheres to this mantra.
Lyon is a part-owner of Troy Asset Management, so we believe he's incentivised to perform, and for his funds and the business to do well over the long term. Other senior members of the group also own a part of the business, and we think this contributes to the stability and loyalty of the team. While Troy is home to a small, close-knit team of investors, the group has recruited more junior members over the years to boost resource and ensure the funds are left in good hands as and when more senior members retire.
Cost
This fund has an ongoing annual charge of 0.87%, but we've secured HL clients an ongoing saving of 0.25%. This means you pay a net ongoing charge of 0.62% and makes the fund one of the lowest-cost funds available in the Flexible Investment sector through HL. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of up to 0.45% per year also applies.
Performance
The chart below shows the fund's performance since launch in 2001. Over this time it's performed better than the broader UK stock market, as measured by the FTSE All Share index, which we think is impressive for a more conservative fund. It's also achieved this with lower volatility than the market. Please remember past performance isn't a guide to future returns.
Importantly, the fund has tended to come into its own and hold up well in weaker markets. We saw this earlier in the year when global markets stumbled amid the coronavirus outbreak. Exposure to assets such as cash and gold provided some resilience, while the shares of companies that provide everyday consumer essentials, such as coffee, chocolate, toothpaste and pet food, held up relatively well. Remember though, the fund will go up and down in value, so you could get back less than you invest.
Troy Trojan performance since launch
Past performance is not a guide to the future. Source: Lipper IM to 31/07/2020.
Annual percentage growth | |||||
---|---|---|---|---|---|
July 15 -
July 16 |
July 16 -
July 17 |
July 17 -
July 18 |
July 18 -
July 19 |
July 19 -
July 20 | |
Troy Trojan | 15.2% | 3.1% | 0.5% | 8.3% | 6.1% |
FTSE All-Share | 3.8% | 14.9% | 9.2% | 1.3% | -17.8% |
Past performance is not a guide to the future. Source: Lipper IM to 31/07/2020.
Find out more about Troy Trojan including charges
Troy Trojan Key investor information