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View the article online at http://citywire.co.uk/wealth-manager/article/a580105

Sebastian Lyon: I feel like Hamlet's 1970s jockey

by Sarah Miloudi on Apr 04, 2012 at 14:01

Sebastian Lyon: I feel like Hamlet's 1970s jockey

Troy Asset Management's Sebastian Lyon says he feels like a jockey from the 1970's Hamlet cigar advert - struggling to break free from the stalls while stock markets race ahead.

Although frustrated his £1.7 billion fund is trotting along while his peers are galloping, the shrewd Citywire Selection manager is holding firm on his belief that the New Year rally in equities will fade.

'The "January effect" - a typical seasonal bounce - seems to be one of many factors the efficient market hypothesis cannot explain,' AA-rated Lyon said. 

'Each of these years [2009, 2010 and 2011] started with hope and optimism - the expectation of improved economic growth and ultimately rising interest rates - a return to normality – only for hopes to be dashed.'

Since the start of 2012, stocks like financials dubbed 'yesterday's losers' by Lyon have been buoyed by the impact of the European Central Bank's liquidity injections and a temporary easing in the single currency zone's crisis.

This has seen optimism among the UK's top fund manager with the typically cautious management team of Jonathan Ruffer, Steve Russell and Hamish Baillie increasing the equity beta in their Citywire Selection Ruffer Investment Company in the first months of the year.

However, a reluctance to markedly increase the risk has proved a significant hurdle for defensive vehicle's like Troy's Trojan , which on Tuesday announced its switch into the Investment Management Association's Flexible sector.

Trotting but peers gallop

Over three months to the end of February Lyon's (pictured) fund has returned 2.82%, versus the mixed absolute return sector average of 3.99%.  Lyon is more accustomed to topping this league, having delivered 53.3% over three years, compared to his peer group average of 35.2%.

Lyon reiterated his previous fear that markets are likely to follow the same trend of previous years where they start in strong fashion before slipping back into the doldrums.

'As with the last three years, stock market rallies are likely to prove temporary as the economic pressures of low growth reassert themselves,' he said.

Hamlet's 1970s jockey

In the meantime, Lyon acknowledges he could look 'very wrong' by not  following consensus on the direction of markets, which in the US and UK have moved steadily upwards since the beginning of the year. 

He said: 'Stock markets have been off to the races in 2012, but Troy and in particular the Trojan Fund, has been stuck in the starting stalls. At times, I have felt like the jockey in the 1970s Hamlet advertisement.

'Trotting whilst our peers are galloping is not something we take pleasure in but after a respectable year in 2011, we are not surprised that our style is temporarily out of fashion. It has happened before and it will, no doubt, happen again.'

1 comment so far. Why not have your say?

banjofred

Apr 12, 2012 at 18:15

I continue to have faith in Mister Lyon and this fund, which has done very well for me in the last year or so. Even last week, when the commodities funds were showing a frightening loss, and when even Invesco Perpetual was well down, Trojan lost 0.3%, which is the most I have seen it fall. I feel sure than tomorrow morning it will have regained that and more with the market rise, especially on gold.

Let him continue to play it safe, and tick over those small steady gains, whilst the others shed 5% 10% 20% 25% every time Berancke breaks wind or some shifty Continental tries to borrow more money.

I am holding cash and Troy and a bit of Inv Perp and worrying over the rest, which will be ditched when (if) they ever get back in the black.

Having said that Hargreaves Lansdowne Multi Manger continues to surprise me.I has dodgy about Fund of Funds and hidden charges etc, but have gained 10% and it continues to do OK.

But First state Global Resources, my old favourite JPM Nat resources, and varois others are note making me rich. This is my current betting slip, and if anyone has any suggestions, I am ready and appreciative of free advice:

First State Asia Pacific Leaders Class A Accumulation Units

First State Global Agribusiness Class A Retail Accumulation

Invesco Perpetual Income Income Units

Newton Real Return Fund Class A Income Units

Rio Tinto plc Ordinary 10p

Troy Trojan Fund Class I Income

Troy Trojan Fund Class I Accumulation

1.8% Fixed Rate Cash Offer

13th January 2012 - 12th April 2012

2.0% Fixed Rate Cash Offer

1st March 2012 - 30th May 2012

3.0% Fixed Rate Cash Offer

10/04/12 - 09/07/12

Artemis Strategic Assets Retail Accumulation

CF JM Finn Global Opportunities Retail Net Accumulation

First State Global Emerging Mkt Leaders Class A Accumulation

First State Global Resources Fund Accumulation Shares

HL Multi-Manager Income & Growth Trust Income Units

HL Multi-Manager Income & Growth Trust Accumulation Units

Invesco Perpetual Distribution Fund Income Shares

JPMorgan Natural Resources Accumulation Units

Liontrust FTSE 100 Tracker Income Units

SWIP FTSE All Share Index (SWIP Foundation Growth)Class B gBP Income

Schroder Managed Balanced Class H Income

Smith & Williamson Global Gold & Resources Income Shares

Morrison (Wm) Supermarkets Ordinary 10p

What do you think Buy more, Sell or Hold?

Banjo

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