From yesterday, the £100m fund was rebranded as the Trojan Global Equity fund – making clear which peer group it sits in and reflecting the fact that manager Gabrielle Boyle has steered the portfolio towards global markets.
Boyle joined Troy in November 2011 from NewSmith Capital Partners, where she had been responsible for global equity portfolios. Prior to this, she had spent 17 years at Lazard Asset Management, where she also ran international portfolios.
FE Alpha Manager Francis Brooke and Sebastian Lyon had managed the portfolio before she joined and, given Brooke also runs the group’s UK equity income fund, it had much more exposure to the UK.
Troy said: “Since joining Troy, Gabrielle has reshaped the fund, broadened the set of investment opportunities and increased the international orientation.”
“The allocation of assets to the United States, Europe and Asia has grown, and allocations to the UK equity market have come down. To reflect this, Troy has taken the decision to rename the fund to better describe its investment policy.”
Trojan Global Equity has only just passed the £100m mark and is off the radar for most investors. However, the scrapping of the ambiguous ‘Capital’ badge for more of a does-what-it-says-on-the-tin label could mean more investors take a look.
However, those who are attracted by performance figures alone are unlikely to come flocking to the fund just because of a name change. FE Analytics shows it has returned 44.68 per cent since Boyle took over the portfolio – underperforming both the average IA Global fund and its MSCI World benchmark.
Performance of fund vs sector and index over manager tenure
Source: FE Analytics
This puts the fund in the peer group’s ninth decile, ranking it 186 out of 231 funds in the sector.
Over three years, the fund moves into the third quartile with a 35.23 per cent gain while over one-year it has made a top-quartile 10.71 per cent.
But a look at other metrics shows why the fund might prove especially appealing to the more cautious investors.
As a house, Troy Asset Management has established a strong reputation because of its focus on capital preservation. Its flagship Trojan fund, which is managed by Lyon, is one of the most cautious funds in the IA Flexible sector and has a portfolio built around defensive blue-chips, index-linked government bonds, gold and cash.
Reasons for Troy’s approach being appealing to cautious investors can also be seen in Brooke’s Trojan Income fund, which resides in the IA UK Equity Income sector.
Performance of fund vs sector and index since launch
Source: FE Analytics
Over the eight years of the past market cycle, the fund has posted the sector’s lowest annualised volatility at 10.52 per cent and the smallest maximum drawdown – which shows the most an investor would have lost if they bought and sold at the worst possible times – at 23.37 per cent. It also has the peer’s group’s best Sharpe and Sortino ratios, which are a measure of risk-adjusted returns.
Although this cautious approach means the fund can lag in strongly rising markets, it has worked over the long term. Since launch in September 2004 it’s the ninth best performer out of 45 UK equity income funds with long enough track records, making investors 160.39 per cent.
During down years, it has come into its own – posting less than half the decline of its peers in the crash market of 2008 and achieving a positive return in 2011 when its typical peer lost money.
Given that Brooke and Lyon helmed the fund across both periods, it’s no surprise that Trojan Global Equity was first quartile in its sector during both 2008 and 2011. It also made a positive return of 5.65 per cent in 2011, when the average global fund lost 9.27 per cent and the index was down 4.84 per cent.
Boyle has yet to take the fund through a serious down market, so it is hard to make comparisons. In 2014 – which is seen as being a relatively challenging year for equity investors, she took the fund into the top quartile with a 14.39 per cent gain.
Performance of fund vs sector and index during 2014
Source: FE Analytics
FE Analytics shows the fund sits first quartile for the metrics valued by cautious investors over the current manager’s tenure.
Trojan Global Equity has a maximum loss of 4.29 per cent against the index’s 6.23 per cent and the sector’s 7.49 per cent; a maximum drawdown of 5.94 per cent; annualised volatility of 8.45 per cent and downside risk of 6.99 per cent.
When it comes to positioning, 47 per cent of the portfolio is in North American equities with 20 per cent in Europe and 5 per cent in Asia including Japan. It has 20 per cent in the UK and the remaining 8 per cent in cash. Top 10 holdings include Novartis, American Express, eBay, Microsoft and Nestlé.
In keep with the mind-set of Troy, Boyle is cautious about the unprecedented monetary easing experiment that has been launched by the world’s central banks in the wake of the global financial crisis and recession.
In her latest update to investors, the manager explained why this could be supportive for the blue-chip stocks she holds: “The hunt for yield looks set to reach a new intensity in 2015.”
“The decision by the Swiss National Bank to abandon their attempts to cap the Swiss franc exchange rate with the euro, and the subsequent announcement that the ECB is to buy €60bn of bonds every month until inflation moves closer to 2 per cent, helped push bond yields to lows never seen in our lifetime.”
“In a world awash with liquidity but starved of income, stable, cash generating, dividend -paying companies are likely to remain in demand.”
Trojan Global Equity has a clean ongoing charges figure of 1.12 per cent.