Troy Trojan Income: June 2025 fund update

• The investment team at Troy works collegiately and is well resourced, experienced and aligned with investors

• Given its focus on quality, we expect the fund to hold up better than the index in falling markets, and to lose ground relative to the index in a rising market

• Performance has been disappointing, but we continue to expect the fund to hold up better than the index in falling markets

• The fund features on our Wealth Shortlist of funds chosen by our analysts for their long term performance potential

How it fits in a portfolio

The Troy Trojan Income fund aims to generate a combination of income and growth over the long term. As the manager focuses more on companies able to sustainably grow income over the longer term, rather than those paying a high income today, it might not appeal to portfolios invested for a high level of income. Overall, this is a more cautious income fund. It could form part of an income portfolio, or a broader portfolio looking to add investment in larger UK companies.

Manager

Blake Hutchins is manager of the fund. He joined Troy in 2019 from Investec Asset Management where he was lead manager on the UK Equity Income fund and co-manager on the Global Quality Equity Income Fund. Prior to that, Hutchins managed retail and institutional UK equity funds at Columbia Threadneedle.

Hutchins’ background and experience makes him well placed to lead on this fund. He’s learnt from a number of excellent fund managers over his career to hone his approach to investing in quality companies for income.

Hutchins is supported by assistant fund manager Fergus McCorkell who joined the business in 2017. He also has the support of Troy’s wider investment team of 11. The team works collaboratively with a common approach to investment.

Process

Hutchins looks for high quality, resilient companies that can generate sustainable and growing cash flows. This supports dividends paid to shareholders and could help the business reinvest for future growth. Companies may be able to achieve this with a sustainable competitive advantage over peers – known as ‘economic moats’. These serve as barriers to entry which are likely to deter potential competitors from entering the industry. The companies the manager invests in are often market leaders and dominant within their field.

The fund tends to be concentrated with between 35 and 50 investments, which means each one can have a meaningful effect on performance, though this approach increases risk. There are currently 37 holdings in the fund.

A focus on high-quality companies and sheltering capital is consistent throughout Troy. It’s what makes their approach different to many others, meaning performance will also be different at times. This approach aims to provide a growing income and shield investors from the worst of market falls, though the fund may fail to keep pace with rapidly rising markets. Historically this has been the case, although this is no guarantee for the future.

In recent months there have been some changes to the fund, including in April during the US tariff related market volatility. Hutchins took this opportunity to add to existing holdings including industrial company Spirax and investment platform AJ Bell.

Culture

Troy is a privately owned company, set up in 2000 by fund manager Sebastian Lyon with the backing of Lord Weinstock. We like that Troy's fund managers are dedicated to the same investment philosophy that was established two decades ago. The group has always been clear about the way its range of funds are managed, and the managers don't stray into overly complicated areas of investment markets. Wealth preservation is key, and each manager adheres to this mantra.

While Troy is home to a small, close-knit team of investors, the group has recruited more junior members over the years to boost resource and ensure the funds are left in good hands as and when more senior members retire. Despite the team’s growth we think Troy has remained a very collegiate unit with all members able to have input.

ESG Integration

Troy has been formally incorporating ESG into its investment processes for a several years but came from a very strong starting point. The firm’s always been focused on the sustainability of returns and is a long term investor. In recent years Troy’s investment team has formalised the way it incorporates ESG and the way it talks to investors about it. ESG is integrated using a materiality-based approach, meaning the managers focus on the issues they deem to be most material. They also have access to third party ESG data and research. How analysts and fund managers engage with ESG, and the overall quality of their research, is considered when calculating their incentivisation packages.

Engagement and voting are the responsibility of the investment team. All votes are discharged and usually cast in favour of management proposals unless the team believes investors’ interests are better represented by abstaining or voting against management. Their preferred course of action is to have dialogue with management ahead of casting a vote against. The firm provides a proxy voting portal where investors can see every vote exercised, although no rationales are provided. That said, Troy publishes a summary of its ‘significant’ votes in its annual ‘Engagement and Voting Disclosure’ report, along with rationales for voting both in favour and against proposals. The firm also produces a quarterly Responsible Investment report, which includes voting and engagement updates and case studies. The fund is not managed to a sustainable mandate.

Cost

The fund has an annual ongoing charge of 1.03%, but through Hargreaves Lansdown you can secure an ongoing saving of 0.40%. This means you’ll pay a net ongoing charge of 0.63%. The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee of up to 0.45% per year also applies, except in a Junior ISA where no platform fee applies. Please note the fund takes charges from capital, which could boost the income paid, but reduce the potential for capital growth.

Performance

Since Hutchins became manager of the fund in October 2019, the fund has delivered returns of 10.09%, compared with returns of 44.00% from the FTSE All Share index over the same period. This is disappointing and we would have expected the fund to have performed better over this period. Past performance should not be viewed as a guide to future returns.

The interest rate rising cycle has proved a challenging period for the fund. Style headwinds created a difficult environment with many of the companies that performed well over this period not being stocks that Hutchins invested in on the basis of them not meeting his quality threshold. This also wasn’t helped by the manager being slow to trim stocks held in the fund that had performed well and which subsequently fell in value.

Over the last year to the end of May 2025, the fund returned 8.48%, lagging behind the 9.35% return from the FTSE All Share index. Over this period, our analysis suggests that the fund’s investments in the technology and real estate sectors posed as a headwind to performance, as did having less invested in financials compared to the FTSE All Share index.

On the other hand, it’s investments in consumer staples as well as having less invested in energy and basic materials companies aided relative performance. At a stock level, distribution business Bunzl and industrial company Spirax were the main detractors from performance, while positions in HR outsourcer Paychex and retailer Next proved the main contributors.

While we have been disappointed with performance, we do continue to expect the fund to hold up better than the index in falling markets, and to lose ground in a rising market. Therefore the fund could be a useful option for more conservative investors looking to shelter themselves from the worst of stock market falls. We also expect the fund to offer the potential for stronger dividend growth than some peers over time.

At the time of writing, the fund has a historical yield of 2.78%. Income isn’t guaranteed, and yields aren’t a reliable indicator of future income.