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A way for individual investors to pool their money together, allowing them to invest in assets that would otherwise be unobtainable
The person who decides where the fund's money should be invested. As such, finding a talented manager (such as those with a Citywire rating) is of paramount importance
Funds are grouped together into sectors, allowing fund managers to be judged against their benchmarks and peer group. Each sector has rules about what assets funds are allowed to invest in
A generic term meaning 'what you own'. If you can buy it, it's an asset. In the world of investments the most common assets are shares, bonds, property and cash.
A group of assets with similar properties. For example, while shares will rise or fall in price individually, economic factors can affect all shares similarly. The same economic factors might affect bonds very differently – so shares and bonds are separate asset classes.
The process of deciding which asset classes to invest in. Successful asset allocation is often more important than selecting individual assets (for example deciding whether to invest mainly in shares, rather than which shares to invest in). Since most fund managers are tied to their sector rules, you need to either do your own asset allocation or buy a managed fund.
A measure of how different areas of the markets are performing, against which funds can be compared. For example, a fund in the UK All Companies sector might be compared against the FTSE All-Share index of every company traded on the London Stock Exchange. A good fund manager will be able to beat the benchmark most of the time, but very few can.
A contract representing something of financial value. Shares and bonds are the most common types of securities.
Unlike most funds, which are restricted to investing in particular markets by the rules of their sector, managed funds can invest in just about anything. While they can have subtly different objectives, they are split into 'Active Managed', where the manager is given free reign; 'Balanced Managed', where the manager can invest a maximum of 85% in shares to reduce risk; and 'Cautious Managed' with a 60% maximum in shares.
A share in a company represents part ownership of its assets (e.g. its buildings, intellectual property and so on) and its future income (paid out as dividends). The value of a share depends largely on other investors' expectations of the company's future growth and income.
Companies can issue bonds as a way of raising money. When you buy a bond, the company is agreeing to pay you a fixed income (hence the alternative name 'fixed income securities') for a certain time period, after which your money is repaid. If investors suspect a company may be unable to repay, they will demand a higher income or 'yield' - hence 'high yield bonds'.
In investing, 'risk' can refer to different things, but essentially means the possibility that your objectives won't be met. In this context, risk is a calculation of the 'standard deviation' of returns each month – in otherwords, a measure of how rocky the returns are. The higher the rank, the less risk the fund takes with your money.
This is a way of calculating 'risk adjusted returns' – i.e. how much value the fund is adding above the risk it takes to generate its returns. The higher the number the better.
A measure of how your investments have performed, relative to your initial investment. For example if you invest £1,000 in a fund, and a year later your investment is worth £1,100, you've made a 10% return.
Comparing the maximum loss for different managers (or between a manager and their benchmarks, as on these factsheets) over a given period is a good way of seeing who's doing the best job of safeguarding investors' money. Otherwise known as maximum 'drawdown', this is a measure of how much you would lose if you bought an investment at its most expensive and sold at its cheapest. For example if a fund was worth £1 a unit at one point but then fell to 50p – regardless of what happened in the meantime – the fund's loss would be 50%.
updated on 06/12/2013
CHANGE IN PRICE
over 3 years to 06/12/2013
TOTAL RETURN over 1 month to 06/12/2013
Trojan Income Benchmark
Who runs this fund?
How this fund has performed overView full chart tool
Maximum loss on £1000
How Trojan Income compares to the sector over
How has Trojan Income performed?
How Trojan Income compares to the sector over
Sectors: What is this fund investing in? Updated 31-08-2013
Top 10 holdings Updated 30-06-2013
News about: Trojan Income
- Launch Date 30 Sep 2004
- Fund size () £1172.1m
- Base Currency GBP
- ISIN GB00B01BP176
- Minimum initial investment £250000
- Minimum additional investment N/A
- Annual management charge1%
- Initial charge5%
He told Citywire Selection: ‘Markets are complacent about the risks and people don’t really think about the negatives.
He concedes that there are signs that economic activity is picking up, but says that any improvement in developed world economies remains ‘dwarfed by the huge problems of debt and the unresolved issues that arise from that.’
With that cautious mind-set, Brooke is keeping his cash reserves high at around 7%, although the perennially defensive Brooke concedes that the overall economic backdrop is getting better.
‘There’s no question that things do look better, particularly in equity markets but how much of that is the distortion of quantitative easing and how much of it is an indicator of genuine improving economic growth?
‘June was a reminder of what happens to markets if the stimulus is going to be withdrawn and how damaging to investor confidence that will be’.
Brooke is a long term holder of Vodafone and believes that the disposal of its minority stake in Verizon is payback for keeping faith with the company.
‘This is a classic reward for the patient investor as the transaction confounded the many commentators that said it couldn’t be done’.
Given this imminent windfall however, Brooke is looking for alternative sources of income as the fund will become less dependent on Vodafone for income following this disposal.
The improving appetite for risk coupled with concerns over the persistent debt burden in the western world has made the bond market difficult to navigate for bond investors. Gilt yields in particular have been rising steadily and Brooke believes that it will not be long before it starts to put pressure on utilities companies.
‘We’ve seen gilt yields backing up sharply and I do feel they will continue to go up which creates more of a headwind for the more bond proxy type stocks and if yields really spiked, going through 3.5% would make life difficult.’
Despite his concerns, Brooke is not reducing his stake in utilities, and has actually added to his stake in Pennon Group this year, believing that with a yield in excess of 4.5% there is still a buffer.
He has recently acquired a stake in BSkyB, taking advantage of the sudden fall in its share price in the wake of BT acquiring the rights to televise premier league football. ‘It fell very sharply after the BT Sport news, around 15%, and we began buying around £7.60. It’s a high quality franchise in an interesting area.’
He added that BT Sport’s move was a defensive move designed to protect their broadband revenue and that BSkyB crucially still had control of the best content.
Performance has been strong in 2013, outpacing a climbing market, which is relatively unusual for Brooke’s fund, although it could have been better still had corporate activity in two of his holdings come to fruition, with Britvic and Severn Trent both affected.
On the latter Brooke remains confused why more dialogue did not take place between the company and the Long River consortium which put in an ‘attractive’ bid.
‘It’s fairly baffling that they didn’t get involved in that conversation as it will take a long time for their share price to get to £20, let alone the £22 they were offered.’
Meanwhile the botched attempt by AG Barr to acquire Britvic also disappointed the manager. ‘It could have been a very powerful UK combination, but failed because a rather unfortunate regulatory decision.’
Over the last five years till the end of August the fund has returned 72% to investors, nearly double the 37.1% gain by the FTSE 350 Higher Yield Index. During which time the annualised volatility on the fund has been 10.6% compared to the 15.4% of the index.
Citywire Verdict: Our most defensive income pick, is one of the most consistent performers in the sector and one to pick for a long term investment. The has a high consumer weighting, mainly through domestic utilities and high yielding tobacco firms. Brooke has a bearish view on the market and tends to avoid cyclical sectors. His reluctance to participate in market rallies can lead to bouts of short term underperformance, however, over the long term this fund delivers. The may be difficult to access as the fund management group are limiting inflows into the fund. We are keeping a close eye on this and will update you on any changes.
What is Citywire Selection?
Citywire Selection is an investment guide containing around 150 of the best ways to invest in a range of areas, as chosen by our research team using a rigorous and transparent process.
We don't sell funds, so you can trust the independence of our recommendations.
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