Troy Trojan Ethical Income Class X - Income

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.

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.

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.