One fund group I believe is instilled with a philosophy of sheltering capital is Troy. It began life as Lord Weinstock's family office, but has since won the admiration of many private investors.
Troy's first principle is that those with money should concentrate on not losing it. They also believe benchmarks should largely be ignored. They feel the investment decisions of other managers are often influenced by the fear of being left behind by their peers rather than genuine enthusiasm for the investment.
This philosophy might be considered slightly unorthodox in fund management circles, but it is one shared by many individual investors.
Since launch in 2004, Francis Brooke has been translating this approach to the equity income sector with the Trojan Income fund. His aims are simple: grow both capital and income over the long-term while controlling volatility.
To date he has been highly successful. Not only has the fund outperformed since launch, rising by 115 per cent against 88 per cent for the equity income sector, but income payments have grown each year through some exceptionally turbulent periods.
At the same time, the fund's capital value has held up better than the sector average during periods of market volatility. The fund proved especially resilient during the global financial crisis in 2008, when a 15 per cent cash weighting helped weather the storm.
Performance of fund vs sector and index since launch to 1 July 2013
Source: FE Analytics
The type of company Brooke invests in also lends the fund resilient qualities. He favours easy-to-understand businesses with high barriers to entry, producing consistent increases in sales and profits. This tends to rule out more economically-sensitive areas such as banks. Only one, HSBC, is currently held in the portfolio and Brooke believes the outlook for most of the sector is highly unpredictable, so he is not willing to invest in it.
Rather than seeking high rates of growth, he looks for companies slowly compounding earnings and growing dividends by a few percentage points each year. Favoured holdings are typically large, multinational companies such as GlaxoSmithKline, Shell and Vodafone.
Defensive sectors such as tobacco and utilities are particularly well represented, and he is also happy to own selected overseas stocks such as Nestlé and Coca-Cola.
Brooke (pictured) was surprised, if not slightly alarmed, that his fund outperformed the market during 2012. Often his focus on solid, dependable companies fails to keep up with a strong rally. However, it seems the stocks in his portfolio were exactly those admired by other investors for their predictable earnings and robust balance sheets. He explains it was primarily a rally driven by quality stocks rather than economically sensitive cyclical areas. In normal circumstances, however, the fund might be expected to outperform its peers in a falling market rather than a rising one.
The manager admits it has become more difficult to find the stocks he would like to own at the right price. He and his Trojan colleagues have commented for some time that the rise in equity prices for the past year has been more to do with monetary stimulus than corporate progress.
Nonetheless, he is still finding opportunities, for instance taking advantage of market falls in May to establish a position in BSkyB. Overall he is content his portfolio is resilient and he has around 8 per cent in cash, which is about average.
Owing to Brooke's outstanding long-term record and an approach we like, the fund has been added to our buy-list, which represents our preferred funds across the major sectors.
It is not the most exciting fund out there, but therein lies the attraction. It is the sort of resilient equity income fund that could be at the heart of a long-term portfolio without requiring too much attention, and as such is worthy of consideration.
Trojan Income has ongoing charges of 1.05 per cent and has £1.2bn in assets under management (AUM). It was recently closed to new investors, but remains available across select platforms.