Bestinvest says
The fund’s focus on capital preservation make it particularly suitable for more cautious investors. During the turbulent markets of recent years it has been one of the least volatile funds in the UK Equity Income sector, but also one of the top performers. Historically the fund has typically provided a degree of protection in weak markets, though it has often lagged strongly rising markets. The portfolio and process are similar to the Troy Income & Growth Investment Trust, run by the same manager.
As with all Troy funds this has a focus on capital preservation and consequently may hold up to 20% cash depending on the overall level of equity valuations. The remainder of the portfolio is constructed on a bottom-up basis and consists of quality, blue chip companies, often with a defensive bias. Cyclical businesses are avoided. The resulting investment universe is limited to around 200 companies – predominantly these are large and mid cap UK stocks but around 30 US and European shares also feature.
A variety of external research sources are used, with the team favouring those demonstrating original and contrarian thought. Internal research looks at company quality and company valuation independently, with the latter focused on absolute rather than relative values. No single valuation measure is considered appropriate for all sectors, but projected cash earnings are considered important, as are return on equity, dividend yield and price to book. The final portfolio is constructed without reference to index weightings, with diversification the key consideration.