![\"\"](\"https:\/\/www.taml.co.uk\/7\/wp-content\/uploads\/sites\/10\/2022\/12\/image-1024x631.png\")
<\/figure>\n\n\n\nSource: Troy Asset Management \/ MSCI \/ FactSet, 31 October 2022. Energy and banks excluded as Troy does not currently invest in these industries.<\/p>\n\n\n\n
We find the same pattern within our UK portfolios. The below chart shows those names that are currently trading at the low end of their price to earnings (P\/E) range. These companies collectively account for almost half of our holdings and notably represent a wide range of profiles and industries.<\/p>\n\n\n\n Source: Bloomberg, 31 October 2022. Not representative of all holdings in portfolio.<\/p>\n\n\n\n It is widely expected that we will see weaker earnings in the coming year, and the latest round of corporate earnings is already highlighting pockets of weakness in the broad equity market. However, so far we are reassured by the defensive and stable trends shown by the core holdings in your Fund. This operational defensiveness has always been central to our investment process. We have been quietly impressed by our global consumer staples companies. While volumes will come under greater pressure in 2023, the evidence suggests so far that Unilever, Reckitt Benckiser, Diageo, Nestl\u00e9, and Procter & Gamble, have managed to raise prices rationally and successfully in order to control their cost base.<\/p>\n\n\n\n As numerous headlines attest, broadly defined \u2018tech\u2019 has had a difficult year. At the end of October, more than half of companies in the NASDAQ index had suffered a share price decline of over 50%!<\/p>\n\n\n\n Source: Datastream, 31 October 2022<\/p>\n\n\n\n However, the Fund\u2019s dividend-paying software and data investments, such as RELX and Paychex, have fared much better, with both anticipating steady sales and earnings growth to continue in the coming months. These are large, established, highly profitable businesses. While cash will be a constraint for many companies in this era of higher rates, our holdings can be expected to continue re-investing their significant free cash flow for growth while funding sustainable dividends.<\/p>\n\n\n\n After many years in which it has been all about \u2018disruptors\u2019 and new business models displacing the old, we believe the balance is slowly swinging back in favour of strong incumbents. Launched in 1982 but with roots that date back to the 19th century, NEXT plc is a classic \u2018incumbent\u2019 company that has stood the test of time. Today it seems that online focused peers such as Made.com and ASOS are struggling to sustain and invest in their businesses, with the former recently going into administration. In contrast, NEXT has continued to adapt and produce consistently good results. Over the last 40 years, it has proven to be one of the most resilient UK retail companies and has built a formidable and highly profitable online business. In a particularly telling sign of the times, it has recently been announced that Next will buy Made.com\u2019s brand, domain names and intellectual property for \u00a33.4m. It was little over a year ago that Made.com listed with a market cap of c.\u00a3800m.<\/p>\n\n\n\n Source: Factset, 31 October 2022.<\/p>\n\n\n\n Source: Factset, 31 October 2022.<\/p>\n\n\n\n NEXT is just one of many leading \u2018incumbents\u2019 within Troy portfolios that we expect to not only survive but prosper over the decades to come. With interest rates having risen, the cost of debt and equity capital is now notably more expensive than it has been for many years. This will act as a meaningful headwind for those \u2018disruptive\u2019 companies that rely on external financing to sustain themselves. Now is the time of the \u2018incumbent\u2019.<\/p>\n\n\n\n So amidst all the drama, there are several reasons to be more optimistic about investing in UK equities. After a \u2018near-death experience\u2019, the government has regained a handle on public expenditure. UK markets have found some poise, but in our view remain excellent value. And after ten years of being overshadowed in favour of exciting, rapid growth companies, we think it is time for solid, reliable UK dividend growth investments to shine again.<\/p>\n\n\n\n 1 <\/sup>The risk that a company is overvalued.<\/p>\n\n\n\n 2<\/sup>The deficiency in value that a buyer estimates for a company compared to its peers in the same industry.<\/p>\n\n\n\n Please refer to Troy\u2019s Glossary of Investment terms here. Fund performance data provided is calculated net of fees unless stated otherwise. Past performance is not a guide to future performance. All references to benchmarks are for comparative purposes only. Overseas investments may be affected by movements in currency exchange rates. Investments in mid and smaller cap companies are higher risk than investments in larger companies. The value of an investment and any income from it may fall as well as rise and investors may get back less than they invested. The historic yield reflects distributions declared over the past twelve months as a percentage of the fund\u2019s price, as at the date shown. The yield is not guaranteed and will fluctuate. It does not include any preliminary charge and investors may be subject to tax on their distributions. In recent weeks, I am sure that investors have once again been reflecting on how best to navigate markets. In today\u2019s challenging…<\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[56],"tags":[108],"wpa_insightstrategy":[24],"coauthors":[73],"class_list":["post-5616","post","type-post","status-publish","format-standard","hentry","category-newsletter","tag-trojan-income-fund"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/www.taml.co.uk\/7\/wp-content\/uploads\/sites\/10\/2022\/11\/image-14-1024x598.png\")
<\/figure>\n\n\n\nPortfolio earnings – reassuring strength<\/h2>\n\n\n\n
![\"\"](\"https:\/\/www.taml.co.uk\/7\/wp-content\/uploads\/sites\/10\/2022\/11\/image-17.png\")
<\/figure>\n\n\n\nTime for incumbents to prosper<\/h2>\n\n\n\n
![\"\"](\"https:\/\/www.taml.co.uk\/7\/wp-content\/uploads\/sites\/10\/2022\/11\/image-15.png\")
<\/figure>\n\n\n\n![\"\"](\"https:\/\/www.taml.co.uk\/7\/wp-content\/uploads\/sites\/10\/2022\/11\/image-16.png\")
<\/figure>\n\n\n\nA more positive outlook for UK equities<\/h2>\n\n\n\n
\n\n\n\n
Neither the views nor the information contained within this document constitute investment advice or an offer to invest or to provide discretionary investment management services and should not be used as the basis of any investment decision. Any decision to invest should be based on information contained in the prospectus, the relevant key investor information document and the latest report and accounts. The investment policy and process of the fund(s) may not be suitable for all investors. If you are in any doubt about whether the fund(s) is\/are suitable for you, please contact a professional adviser. References to specific securities are included for the purposes of illustration only and should not be construed as a recommendation to buy or sell these securities. Derivatives (whose value is linked to that of another investment, e.g company shares, currencies) may be used to manage the risk profile of the fund.
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Issued by Troy Asset Management Limited, 33 Davies Street, London W1K 4BP (registered in England & Wales No. 3930846). Registered office: Hill House, 1 Little New Street, London EC4A 3TR. Authorised and regulated by the Financial Conduct Authority (FRN: 195764) and registered with the U.S. Securities and Exchange Commission (\u201cSEC\u201d) as an Investment Adviser (CRD: 319174). Registration with the SEC does not imply a certain level of skill or training. The fund described in this document is neither available nor offered in the USA or to U.S. Persons.
Copyright Troy Asset Management Ltd 2022.<\/p>\n","protected":false},"excerpt":{"rendered":"