Product Review: Troy Trojan Fund

Hello all and welcome back to Phenomenal UK for another product review. In today's review we're going to be taking a look at the Trojan Fund by Troy Asset Management. To note on the fund's objectives, the investment objective of the Trojan Fund is to seek to achieve growth in capital net of fees ahead of UK inflation measured by UK RPI over the long term, 5 to 7 year periods, and it notes that the policy is to invest globally in government and public securities such as sovereign debts and treasury bills, corporate bonds, equities, equity-related securities, private equity, precious metals, cash, cash equivalents, and deposits, as we can see, uh, so clearly there. To note on the asset allocation, we can see they've got a 40% allocation in equities, 16% allocation in US TIPS, 12% in UK inflation-linked bonds, um, gold-related investments 10%, Japanese government bonds 10%, short-dated gilts 11%, and cash at 1%. To note on the benchmarks they're using, we can see on the fact sheet, so we've got the Bank of England base rate as well as the FTSE All-Share Index and the UK RPI Index as what they're measuring against. Scrolling down just to look at that 30% equity element, that's comprised of quality large-cap names you'd expect to see such as Unilever, Alphabet, Visa, Nestlé, etc. So that's to be noted, and if we scroll down to have a look at the fees, we can see this is an expensive fund at the ordinary shares at 1.01% and the S-Charity shares at 0.76%. The point of this analysis is going to be quite simple: are these fees justified? Let's find out. In regards to the benchmark selection that we'll be using, I've created a 4-fund portfolio which are quality 30%, bonds 60%, and gold at 10%. Now in regards to that 60% bond allocation, you've got the Bloomberg World Government Inflation-Linked Bond Index hedged to the pound, but that does— that's the inflation linker, but that does carry duration risk. So that's where we bring in ERNS for the ultra short bonds with some near very little duration risk entirely. So now that's noted, and obviously we've got the quality factor for the 30% equity element, as we can see they're using for like a defensive portfolio, and we've also got gold at the 10% allocation. So moving over to the asset comparer within Phenomenal, we're looking at this data from the 3rd of October 2014, where we can see cumulative returns for both portfolios has been quite similar. You can see with, uh, the portfolio benchmark that we created, uh, seeing, uh, excess cumulative returns from, um, October 2023, uh, region. So it's worth noting. Let's look now to risk versus return, where we can see the benchmark portfolio that we created has seen a, a lesser volatility at 5.5% and a higher CAGR at 6.45%. This is versus the Trojan funds at a volatility of 5.61% and Akéga at 5.46%. Looking at portfolio stress testing, so this is a, a key, a key one for this particular fund, and we can see it versus the benchmark, they have been quite comparable. But where Trojan have certainly delivered value was in 2022 where we saw the market sell-off where we can see a -4% deeper drawdown in the benchmark portfolio that we created. Okay, and we can also see this on, uh, drawdowns line chart shown as well. But let's, uh, continue now. Let's go over to fundamentals. Well, the main thing I want to look at is breakdown by markets. So the Trojan Funds, 31% in the UK, 62% international. Versus the benchmark that we made, 18% in the UK, so less home buyers there and a slightly higher international exposure at 76%. In regards to the actual breakdown by top 10 countries, we can see similar amounts in the US, around 10% difference, so 44% in the US for the benchmark we created versus 34% in the US for the Trojan Fund. We can see the other lower allocations there as well. In regards to breakdown by sectors— let me move my noggin out the way— we can see sector bets for the Trojan Fund in consumer staples, industrials, and information tech, though I do note the benchmark portfolio that we created having a higher allocation to information tech at 12%. But that will likely be attributed to the higher US exposure in the benchmark that we created. Move that back down again. Let's go over to factors now, where just to note, this is based off the whole portfolio as a whole. So the thing that pops out straight away, -0.2 value factor beta for the Trojan fund, which is to be expected given the quality nature of this particular fund. And we can also see the benchmark that integrated equally having a negative factor beta to value. In regards— and you can also see further here, but the main thing to note for this is a negative factor beta to value. You will see only a slight risk source for the quality factor there, as mentioned. That's also accounting for the large allocation in fixed income as well, so to be noted. But I'm going to conclude this analysis on the statistics tab, where overall we can see Trojan has, um, well, it's delivered a lesser CAGR, a higher volatility, and a lesser Sharpe ratio than the benchmark, at considerably higher fees at 1.01% versus the benchmark's at 0.19%. In regards to value they have created, we can see that is in the max drawdown, where they beat at a max drawdown of -9.86% versus the portfolio we created, the max drawdown at -10.47%. And that brings me to the end of this analysis. I do hope that was helpful and informative. And as always, if there are any funds or portfolios you would like me to review next, please let me know in the comments. Okay, thanks all, and please do like and subscribe. Cheers!