Funds & ETFs 

Preservation pushes Trojan Income ahead

Trojan Income is among the top three performing UK equity income funds over three and five years in terms of total return, and still offers a good level of yield at 4.5 per cent.

The fund's strong long-term total returns mount up because it mostly makes positive yearly returns, and even in 2008 lost far less than the average UK equity income fund. This is in keeping with its manager Troy Asset Management's aim to protect investors' capital and minimise volatility. Trojan Income fund's specific aim is to provide growing levels of income in excess of the UK equity market's yield.

The fund's total expense ratio of 1.07 per cent is far lower than that of most unit trusts and open-ended investment companies (Oeics), which is also helpful to growth.

Troy's managers also measure their performance against cash rather than stock market indices, and do not follow indices such as the FTSE All-Share when constructing portfolios. They pay particular attention to the downside risk of any investment, preferring stable or growing companies with a strongly differentiated product or service, and high barriers to entry. They avoid highly acquisitive companies and speculative investments.

The managers often take a contrarian view to take advantage of short-term market disillusionment, typically buying a stock when its share price significantly understates its long-term potential.

For further details on Troy Income's investment approach, see our interview with its fund manager Francis Brooke here and our fund tips for 2011 here.

The downside to this defensive investment approach is that when markets rally such as 2009 and 2010 the fund lags its peers, although it still beats most of them over longer-term time periods.

To align the company's interest with those of its investors, all Troy's executive directors and fund managers are significant shareholders in its investment funds.

TROJAN INCOME FUND O Inc NAV (TRIINC)

PRICE130.62pSHARPE RATIO0.05
SIZE OF FUND£269m*1-YR PERFORMANCE15.86%
No OF HOLDINGS42*3-YR PERFORMANCE15.08%
SET[UP DATE30 September 20045-YR PERFORMANCE33.85%
MANAGER START DATE30 September 2004TOTAL EXPENSE RATIO1.07%*
TURNOVER19.6%*YIELD4.55%
VOLATILITY3.95MINIMUM INVESTMENT£1,000*
TRACKING ERROR3.93MORE DETAILStaml.co.uk

Source: Investors Chronicle & *Troy Asset Management.

Performance data as at 22 May 2011.

Top 10 holdings as at April 2011

HoldingPercentage
Vodafone4.3%
Royal Dutch Shell4.1%
BP4.1%
Nestlé4.1%
Unilever4.0%
GlaxoSmithKline3.7%
British American Tobacco3.7%
Imperial Tobacco3.5%
Tesco3.1%
AstraZeneca3.0%

Sector breakdown

SectorPercentage
Consumer goods29%
Financials17%
Oil & gas11%
Utilities11%
Consumer services7%
Healthcare7%
Industrials4%
Technology4%
Telecommunications4%
Cash6%

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