Troy Asset Management’s Spectrum fund has slashed its minimum investment from £250,000 to £1,000, as the vehicle celebrates its third anniversary. "A three-year track record means people are interested, investors can see the returns we’ve managed, and you can go and knock on doors," the group’s chief executive Sebastian Lyon (pictured right) explained.
The multi-manager fund offers investors access to both open and closed-ended vehicles, some of which are not available to individual investors. Findlay Park American, Veritas Asian and international fixed income vehicle CG Real Return, all closed to new investors, are held within the portfolio.
Performance of fund vs sector over 3-yrs
Source: Financial Express Analytics
Financial Express data shows the Triple Crown-rated £38m fund returning significantly more than its IMA Active Managed sector since its launch, at a lower charge.
While figures from Financial Express Analytics show some multi-managers charging a total expense ratio (TER) as high as 3.5 per cent, and the average fund of fund’s TER hitting 2 per cent, Troy Spectrum’s TER is 1.54 per cent.
"We’re a low-turnover fund. We fund a manager and stick with him. In the last year, the top-10 holdings only saw one change. The managers add most of the value, so we charge a very low annual management charge [65bps], which helps keep our TER low," Lyon continued. He added that the fund’s management team, which also includes Troy AM’s director Francis Brooke (pictured left) and analysts Sean Beck and Hugo Ure, expects to hold on to managers in its portfolio for between five and 10 years, but admitted there was one investment trust in the portfolio that had disappointed.
"One fund, which I won’t name, we bought a couple of years ago has disappointed, but it’s trading out at a wide discount so now’s not a good time to sell," he said.
"We like managers like [First State’s] Angus Tulloch, and [Lindsell Train’s] Michael Lindsell, among others, who run money in a very specific way."
"They will have a period of dull performance from time to time, but as long as that can be justified by periods of outperformance, we’re happy."
The fund currently has around 10 per cent in investment trusts, but Lyon says its closed-ended vehicle holding could go as high as 30-40 per cent in the future.
The managers say they remain cautious on the outlook for the global economy and so are in defensive parts of the market in their other funds, which include Balanced Managed fund Trojan and Active Managed fund Trojan Capital.
"We’re not that optimistic about stocks; the UK market has rallied by about 70 per cent since the downturn, while the US market has enjoyed its biggest rally since the 1930s."
"We were optimistic in 2009 and moved very pro-equity, but in the past year we’ve really taken risk off the table."
Brooke added that more than 40 per cent of the fund of funds was in defensive vehicles, including Peter Spiller’s CG Real Return and investment trust RIT Capital Partners, which tend to fare well in downwards-moving markets.
That move away from equities is reflected in the fund’s figures. Over three years, Financial Express data shows Troy Spectrum’s volatility score reaching 11.6 per cent, compared with 16.8 per cent from the sector average.
Brooke and Lyon are both rated Trustnet Alpha Managers for their consistent outperformance of their peers.
Francis Brooke will be speaking on 10 May at The Active Portfolio Forum, run by Financial Express. If you are a financial adviser and would like to meet with him, please send a request to jennifer.allan@financialexpress.net.