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Trojan Ethical Income Fund

The investment objective of the Trojan Ethical Income Fund is to seek to achieve income with the potential for capital growth in the medium term (3 to 5 years).

Its investment policy is to invest at least 80% of its assets in UK and overseas equities, including investment trusts and real estate investment trusts and equity-related securities. At least 60% of its assets will be invested in UK equities and equity-related securities. A maximum of 30% of its assets may also be invested in overseas equities and equity-related securities.

The fund will invest in accordance with the parameters of its ethical investment criteria, which consider ethical issues in relation to: fossil fuels, pornography, tobacco and certain types of armaments. A document setting out the fund’s ethical investment criteria is available here.

In addition to the O share class referred to on this page, I & S Classes are also available. Please contact us for more information.

'O' Share Class Price 12/11/2019
Accumulation Shares
Income Shares
124.81p
Fund Size
£163M (30/09/19)

Past performance is not a guide to future performance.

September 2019

Your Fund returned +1.0% during the month compared to +3.0% for the FTSE All-Share Index (TR).

In theory equity markets should move sharply to price-in quantifiable news flows but their mercurial nature also allow significant mispricings to persist when the picture becomes more complex.

The responsiveness of prices is well illustrated by the speed at which markets respond to statements by central bankers. Investors, caught up in the enthral of the Sino-US trade war, had assumed that the US economy was weakening and interest rate cuts would follow.  The inverted yield curve was a reflection of this view.  On 18th of September the Federal Reserve did indeed cut interest rates but signalled a less negative medium-term prognosis.  As investors moved to reflect this view treasury yields rose and investors rotated out of quality and into more speculative value investments.  Against this backdrop your more defensive, quality-orientated fund lagged the market.

September also saw sterling fall to below USD 1.2 for the first time since early 2017.  As sentiment around Brexit has fluctuated, the UK currency has been an effective gauge of pessimism, as have the valuations of many UK domestic stocks.  In some cases these have moved to levels that we believe significantly under-price the long-term value of the underlying business.

One such stock was Lloyds Bank.  Following reduced expectations for margins and further provisioning for PPI claims, this domestic banking franchise was being priced at a material discount to book value. Although the current political backdrop creates uncertainty, we believe that in the long term this discount is unwarranted.  As such, we have added to our holding in recent weeks alongside a small group of other undervalued UK stocks.  While such mispricing opportunities persist, there are opportunities for active managers to deliver excess returns.

 

 

 

Source: Lipper, Link Fund Solutions Limited

Total Return 06/01/2016 Since Launch 30/09/2016 3 Years 30/09/2018 1 Year 31/03/2019 6 Months
Trojan Ethical Income O Acc +39.8% +29.3% +14.5% +10.6%
FTSE All-Share TR +40.4% +21.7% +2.7% +4.6%
Discrete Calendar Annual Returns (%) 2016 2017 2018 2019
Trojan Ethical Income O Acc +8.0% +10.2% -2.9% +20.9%

Performance is calculated on a total return basis, net of fees, in sterling terms.

Source: Lipper, Link Fund Solutions Limited. Since Launch (06/01/2016) to 30 September 2019.

Risk Analysis Since Launch (06/01/2016) Trojan Ethical Income O Acc FTSE All-Share TR
Total Return +39.8% +40.4%
Max Drawdown -8.2% -15.0%
Best Month +4.8% +6.4%
Worst Month -4.9% -5.2%
Positive Months +63.6% +63.6%
Annualised Volatility +7.5% +9.3%

Performance is calculated on a total return basis, net of fees, in sterling terms.

Maximum Drawdown measures the worst investment period

Annualised Volatility is measured by standard deviation of annual returns. 

Source: Lipper, Link Fund Solutions Limited.  

Top 10 Holdings Fund %
Unilever 4.8
Compass 4.2
Lloyds 4.2
GlaxoSmithKline 3.5
Procter & Gamble 3.4
Colgate-Palmolive 3.4
National Grid 3.3
AstraZeneca 3.2
Reckitt Benckiser 3.1
RELX 3.1
Total Top 10 36.2
33 Other Holdings 56.6
Cash & Equivalent 7.2
Total  100.0

Asset allocation and holdings subject to change.

 

Past performance is not necessarily a guide to future performance. The value of a fund and any income from it may go down as well as up and investors may get back less than they invested. Changes in rates of exchange may cause the value of investments to go up or down. Returns may increase or decrease as a result of currency fluctuations​. This data is provided for information only and should not be reproduced, published or disseminated in any manner. Although Troy considers the data to be reliable, no warranty is given as to its accuracy or completeness. Any comparisons against indices are for illustrative purposes only.

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