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‘Black Monday was just the beginning’

12 September 2015

The Daily Telegraph

Gabrielle Boyle, who runs the Troy Global Equity fund, tells Kyle Caldwell why she thinks markets have further to fall. 

Gabrielle Boyle, manager of the Troy Trojan Global Equity fund, refuses to take “excessive risks”, which is why shares that are reliant on the fortunes of the economy, such as supermarkets, are off the menu. Instead she targets shares that have staying power – some of her holdings have been in business for well over 100 years. Here Ms Boyle names her most recent buys but cautions that shares are too expensive and that last month’s heavy falls should not be viewed as a one-off.

How do you go about picking shares?

There are a couple of characteristics I look for: high returns on invested capital, competitive advantages and strong balance sheets. I also like to keep things simple, so I avoid overly complicated businesses – the world is complex enough. This leads me to avoid capital-intensive businesses such as miners and instead find exceptional companies that will be around for many decades to come. The aim of the fund is to grow capital without taking on excessive risks, so I will never look to buy a share that is out of fashion just in the hope that returns will improve from low levels. Instead I prefer to pick companies that can continue to grow their earnings regardless of the economic backdrop, which is why we hold the likes of Colgate-Palmolive and Nestlé. Their products are bought every day all over the world, so will over time continue to deliver excellent compound returns.

How did you react when global stock markets fell heavily last month?

I viewed the sell-off as a sign of how stock markets have been distorted by quantitative easing (QE) and I expect there to be more setbacks to come. Valuations are richer than I would like to see, which does make my job of trying to find great companies at reasonable prices more challenging. I will therefore be using any sell-off as an opportunity to pick up shares that meet our criteria or to top up favoured holdings. This time around I started a small position in Procter & Gamble, which owns Pampers and Gillette, and added to my existing holding in American Express.

What changes have you made to the fund over the past year?

Not much has changed, although I did sell Bic, the razor business. The shares were expensive on a price to earnings ratio in the low 20s when I sold, but the main reason for the sale was that I thought the business was too cyclical, with its sales reliant on the strength of the global economy. Purchases include Japan Tobacco, the world’s third-largest tobacco manufacturer. I like the fact that the business has pricing power. Another buy has been Phillip Morris International, the American tobacco firm.

You took over the fund three years ago. What are the main changes you have made?

I like investing in mature technology companies, so the fund’s exposure to this sector has increased. These businesses produce high returns on their capital and typically have huge amounts of cash on their balance sheets – Google for example has $70bn. I also own eBay and Microsoft.

Which shares do you tend to avoid that your peers favour?

I tend to shy away from banks, with Wells Fargo the sole holding in the fund. The amount of leverage these businesses have puts me off. I also avoid telecom companies because they do not generate high margins.

Do you invest your own money in the fund?

I do – my entire self-invested personal pension is in the fund.

What would you have done if you hadn’t become a fund manager?

If I had had the talent, becoming a professional event rider would have been a great career.