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Troy Trojan Ethical Income Class X - Income

Sell:103.76p Buy:103.76p Change: 0.38p (0.37%)
Prices as at 23 May 2024
Change: 0.38p (0.37%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 23 May 2024
Change: 0.38p (0.37%)
Prices as at 23 May 2024
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund is on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. However, this is not a recommendation to buy.

Hugo Ure has managed the Trojan Ethical Income fund since launch in January 2016. Overall, he has 17 years' experience in the investment industry and, prior to joining Troy in January 2009, he worked at Kleinwort Benson, where he was an equity analyst and involved in portfolio management.

Ure has a shorter analysable track record than some other fund managers on the Wealth Shortlist, but this fund follows a similar investment process to the one implemented on other Troy equity income funds and leverages the skills and experience of the highly-regarded Troy Equity Income team.

We also like the way the business is structured. Troy is a privately owned company, and a significant amount of it is owned by directors and employees, including Ure. We like this structure as it shows the fund managers are focused on the long term and aligned with their investors' interests.

What makes the fund different to many other income funds is its ethical approach. The manager doesn't invest in areas deemed unethical, such as tobacco and fossil fuels. Some of these areas are often well-represented in traditional income funds without an ethical tilt, so we think this fund could bring diversification to an income-focused portfolio. It could also be a good addition to a responsible investment portfolio built to provide income.

Our view on the sector

Funds in the Responsible Investment sector take a variety of approaches. Some invest in companies that are well-managed and take their commitments to the environment and society seriously, others simply look to avoid the worst offenders. Some even try to invest only in companies making a positive impact in the world, like green energy producers, or companies that clean and reuse water.

Responsible investing offers the possibility of making money in a way that's in line with your views and beliefs. And it's becoming more and more popular. But 'responsible' means different things to different people. An industry that seems abhorrent to one person might seem like a necessary evil to others. That's why you'll need to clarify each fund's approach and make sure it's consistent with your views before you invest.

Performance Analysis

Since launch in January 2016, the fund's risen strongly, but it's slightly lagged the broader UK stock market. This is in line with what we'd expect, given the team's approach. Their relatively defensive style means the fund tends to hold up well when stock markets fall sharply but lag a rapidly rising stock market. Stock markets have generally performed strongly since the fund's launch, so it hasn't quite kept pace. Past performance isn't a guide to future returns.

That said, the fund has tended to come into its own and outperform when markets fall. In the first half of 2020, for instance, when stock markets across the globe plunged in response to the coronavirus crisis, the fund sheltered investors' money well in comparison to the UK stock market.

Given part of the fund invests overseas, we expect it to perform differently to its UK-focused benchmark at times. The fund's ethical exclusions will also affect performance. When the excluded areas are out of favour and their share prices fall, the fund could do well. When they perform well, the fund will miss out. Oil & gas, for instance, makes up a relatively large part of the UK stock market and tends to pay high dividends, so the sector features in many equity income funds. The fund may underperform the UK market and UK equity income funds when oil & gas firms perform well, but the reverse is also true.

Ure has been co-manager of the Trojan Income fund, alongside Francis Brooke, since joining Troy in 2009, so he's very familiar with the firm's well-established investment process. We think the high number of investments that are common to both funds demonstrates the consistency of thinking across the team.

Overall, we admire the team's experience, strong track record and their sensible approach, and believe they can deliver good long-term results for investors.

Investment Philosophy

All Troy funds are run with one overriding aim - to shelter investors' money from the worst stock market falls and increase its value over the long term. Sheltering wealth when the going gets tough means there's less to make back once the good times return.

Process and Portfolio Construction

Ure and his team only invest in companies they thoroughly understand, with sustainable advantages over the competition, such as a unique product or service that rivals struggle to copy. This should allow them to generate strong cash flows over the long term, and this could support the company as it reinvests for future growth and pays dividends to shareholders. They avoid companies with high amounts of debt, and those that rely on acquiring other businesses to grow.

The manager won't invest in companies deemed unethical, such as those with significant involvement in armaments, tobacco, pornography, fossil fuels, alcohol, gambling and high interest lending. He also conducts Environmental, Social and Governance (ESG) analysis on each company to achieve a deeper understanding of the risks. Where he feels improvements can be made, he'll engage with the company.

Once the team's identified a company that meets their criteria, and passes the ethical screens, they consider its financial strength, how managers' interests are aligned with those of shareholders and, finally, whether its shares are available at an attractive price.

The focus is on large and medium-sized companies, although the manager does have the flexibility to invest in higher-risk smaller companies too. While a large part of this fund invests in the UK, it isn't in the IA UK Equity Income sector. That's so the team can maintain flexibility and invest part of the fund overseas, particularly if they can't find enough income opportunities in the UK that meet their ethical and quality criteria.

Please note the fund takes charges from capital, which could boost the income, but reduces the potential for capital growth. The manager also has the flexibility to invest in derivatives which, if used, adds risk.

question mark Manager Track Record Based on HL Quantitative Research

This information is currently unavailable.

Fund Track Record

23/05/19 to 23/05/20 23/05/20 to 23/05/21 23/05/21 to 23/05/22 23/05/22 to 23/05/23 23/05/23 to 23/05/24
Annual return n/a 10.86% -2.80% 4.81% 6.14%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Information about the fund

Fund manager biography

manager photo
Manager Name: Hugo Ure
Manager start date: 6 January 2016
Manager located in: London

Hugo is manager of Trojan Ethical Income Fund, co-manager of Troy Income & Growth Trust and assistant fund manager of the Trojan Income Fund and Trojan Income Feeder Fund. He joined Troy Asset Management in January 2009. Hugo graduated from Oxford University in 1999, following which he spent five years in the British Army serving with the Scots Guards. In 2004 he left to join Kleinwort Benson where, after a short period in portfolio management, he focused on equity analysis until his move to Troy in January 2009. Hugo is currently co-manager of the Troy Income & Growth Trust and assistant manager of the Trojan Income Fund. He has also had primary responsibility for a £75m segregated charity portfolio since 2012. Hugo is a CFA charterholder.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account