Lindsell Train Japanese Equity, Findlay Park American and Polar Capital Global Insurance are some of the funds that have been owned in the successful Troy Spectrum portfolio since its launch just over 10 years ago. 
When Troy Spectrum was launched on 29 February 2008, Troy Asset Management chief executive Sebastian Lyon said it would “select managers carefully and intend to hold funds for the long term”.
The fund, which has been run by Tom Yeowart (pictured) since September 2014, has the “overarching aim” of finding talented managers that can generate significant value for its investors.
Since launch, the fund has made a 118.89 per cent total return, putting it in the top quartile of the IA Flexible Investment sector. It has underperformed its MSCI World benchmark but it must be noted that the fund is not a pure equity offering and holds other assets in its portfolio.
Performance of fund vs sector and index since launch
Source: FE Analytics
Troy Spectrum has maintained a low turnover approach and today has six holdings that have been in the portfolio since launch. In this article, Yeowart reveals these funds and explains what he likes about them.
First up is the $11.5bn Findlay Park American fund, which has a strong long-term track record and has many fans in the multi-manager space. Since Troy Spectrum was launched, Findlay Park American has posted a 305.42 per cent total return – beating its Russell 1000 benchmark by a decent margin and making it the best performer in the offshore FO Equity – North America sector.
In addition to the fund’s strong track record (it has made a compound annual return of 12.6 per cent since inception, beating the Russell 1000, Russell 2000 and S&P 500 in the process), Yeowart said he likes the fact that Findlay Park has a culture that “emphasises performance and refuses to rest on its laurels”.
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
“Unlike many fund management businesses, Findlay Park do little to promote their wares, focusing purely on the task of investing. You won’t see their ads at train stations or on taxi cabs,” he explained.
“The American fund has been closed to new investors for much of its life and Findlay Park recently decided to transfer the Latin American fund, their only other offering, elsewhere. Many asset managers seek to diversify their business risk by launching new funds. Findlay Park’s approach is to more closely align their interests with the underlying investors by linking the success of their business with the performance of the American fund.”
Another of Troy Spectrum’s longstanding holdings is LF Morant Wright Japan, which is run by London-based boutique asset manager Morant Wright – who focuses exclusively on Japanese equities. It has made 191.58 per cent (beating both its average IA Japan peer and the Topix) over Troy Spectrum’s lifespan.
The team behind LF Morant Wright Japan comprises six managers who looked for undervalued Japanese companies with sound business franchises. Current holdings include Fuji Media, Sumitomo Mitsui Trust, Tokyo Broadcasting, Mitsubishi UFJ Financial and Toyota Industries.
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
Yeowart said: “The companies they typically favour have strong balance sheets with significant amounts of cash, giving us confidence that Morant Wright’s holdings are well placed should corporate Japan continue to focus on improving shareholder returns.”
Sticking with Japan, Lindsell Train Japanese Equity – which is headed up by FE Alpha Manager Michael Lindsell – has been in Troy Spectrum’s portfolio since launch. Like many of Yeowart’s other holdings, Lindsell Train is an employee-owned boutique with a distinct investment philosophy.
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
The fund – which is in the IA Japan sector’s top decile over one, three, five and 10 years – is built around a concentrated portfolio of 20-25 holdings that the manager believes can compound at high rates over time. The process is very long-term in focus with new holdings rarely being added or positions sold out of, although video game publisher Square Enix was recently bought.
“The Lindsell Train Japanese Equity fund has acted as a good complement to Morant Wright Japan and has significantly outperformed the Topix index over the long term,” Yeowart added.
Brown Advisory Latin American, which was formerly known as Findlay Park Latin American and was mentioned previously in this article, has also been held by Troy Spectrum since launch. This is another strong performer, making 80.24 per cent (the highest return of the FO Equity - Latin America sector) while in the multi-manager portfolio.
Manager Rupert Brandt has witnessed a number of political, economic and market cycles in Latin America and therefore focuses on good quality, cash generative companies that he believes are able to survive and prosper in a wide-range of different economic environments.
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
“This approach has stood the fund in good stead,” Yeowart said. “Nevertheless, given the inherent volatility of Latin American equities, the fund has always been a relatively small constituent of Spectrum.”
Peter Spiller, Alastair Laing and Chris Clothier’s £450.5m CG Real Return fund is another highlighted by the Troy manager. It aims to generate real returns by investing in a portfolio of non-UK government index-linked bonds, with around one-quarter of the portfolio currently invested in US assets and another 13 per cent in German bonds.
“The team has a deep knowledge of the index-linked market and an absolute return mindset,” Yeowart explained. “The fund has acted as a valuable diversifier within the Spectrum portfolio and generated good risk-adjusted returns.”
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
As the chart above shows, CG Real Return has made a 76.99 per cent total return while in Troy Spectrum’s portfolio, underperforming its average peer in the FO Fixed Interest – Global sector, although it must be noted that this is a relatively mixed bag of funds.
Polar Capital Global Insurance, which is managed by Nick Martin and Alec Foster and invests in a diversified portfolio of specialty commercial property and casualty insurers, is another offering that has been owned by Troy Spectrum since launch. Over this time, it has made 242.42 per cent and beaten its MSCI World/Insurance benchmark by a significant margin.
Its £1.1bn portfolio is relatively concentrated and at the moment comprises 34 positions. In terms of insurance sector exposure, 35.6 per cent of assets are in commercial insurers, 19.4 per cent in retail insurers and 19.4 per cent in reinsurance, with Arch Capital, Marsh & McLennan and Chubb being the largest individual holdings.
Performance of fund vs sector and index since 29 Feb 2008
Source: FE Analytics
“The companies the team prefer tend to be well managed, disciplined and have strong track records of profitable underwriting,” Yeowart said. “In addition, the purchase of non-life insurance is often required by law and is consequently less sensitive to the macroeconomic cycle. As a result, the fund has performed relatively well during periods of market weakness and compounded at a healthy rate.”
The final longstanding holding of Troy Spectrum is exchange-traded commodity Gold Bullion Securities. As an investment house, Troy Asset Management is a fan of the yellow metal and is a structural component of many of its funds, in keeping with the firm’s philosophy of putting capital preservation above all other aims.
“Gold Bullion Securities has been a valuable ‘diversifier’ within Spectrum’s portfolio and is an asset we believe can act as a safe haven during times of stress,” Yeowart concluded.