Soft-closed Trojan fund passes £2bn mark
The sector-leading portfolio is closed to new investors, but its existing customers have continued adding to their positions.
By Joshua Ausden, News Editor, FE Trustnet
Friday August 31, 2012
Last year’s soft-closure has done little to dampen the demand for Sebastian Lyon’s Trojan
fund, which is among the best selling in the IMA universe over six- and 12-month periods.
According to FE Analytics
inflows data, the FE Alpha Manager’s portfolio has seen inflows of £772m in the last year – a figure beaten by only nine funds. Total assets under management (AUM) now exceed £2bn.
It is still possible to buy the fund on select platforms such as Hargreaves Lansdown with a minimum investment of £1,000, but it has been closed to the vast majority since April 2011.
Most of its inflows have come from existing investors.
Best-selling funds over 1-yr
Source: FE Analytics
Of the nine portfolios that have higher inflows, five are under the management of M&G – three of which are managed by fixed interest specialist Richard Woolnough
. Baillie Gifford Diversified Growth
, Newton Asian Income
, Newton Real Return and Standard Life Global Absolute Return Strategies
make up the elite group.
Trojan is the only fund included in the group that is managed by a boutique outfit. However, what Troy Asset Management lacks in marketing it more than makes up for in performance.
According to FE data, it is among the five best-performing multi-asset funds in the entire IMA universe over three, five and 10 years.
It is number-one in its IMA Flexible Investment sector over three and five years, with returns of 41.4 and 51.64 per cent respectively. Over the last decade Lyon has returned 161.52 per cent, compared with 105.8 per cent from its All Share benchmark and 80.34 per cent from its sector average.
Performance of fund, sector and index over 10-yrs
Source: FE Analytics
All of this outperformance has also come with significantly less volatility. Lyon (pictured right)
puts an emphasis on capital preservation, a strategy that paid off in the 2008 downturn.
According to FE data, Trojan was one of only a handful of funds that managed to break even over the 12-month period, delivering 1.11 per cent, compared with a loss of 29.93 per cent from the FTSE All Share.
The manager’s defensive style tends to lead to underperformance during market rallies, which was the case in the 2009 to 2010 bull run; however, over the long-term, Lyon’s strategy has guided investors through a very difficult 10 years for markets.
While the fund may invest 100 per cent of its assets in equities, Lyon currently has just 31 per cent in this asset class. Around a third of this is UK domiciled, with the rest split between the US, Europe and Japan. British American Tobacco (BAT), Berkshire Hathaway and Microsoft are all top-10 holdings.
Lyon has a 12 per cent weighting in bullion and 5 per cent in gold equities, and 28 per cent in UK and US index-linked bonds. Around 16 per cent of his assets are in cash, which gives him the flexibility to buy up battered stocks if the markets fall sharply.
While he is currently defensively positioned, Lyon and fellow Troy FE Alpha Manager Francis Brooke believe there could be a significant buying opportunity in UK equities on the horizon.
In a recent interview with FE Trustnet
, Brooke said a yield of 5 per cent and a price-to-earnings ratio of under 10 in the FTSE All Share will give the green light for a buying opportunity.