View more on these topics

Troy’s Lyon defends Trojan cash pile

Lyon Sebastian Troy

Troy Asset Management chief executive Sebastian Lyon has defended the high cash weighting in his £2.7bn Troy Trojan fund, arguing there is a lack of appealing opportunities around.

Troy Trojan had 23.7 per cent of its portfolio in cash or equivalents at the end of May. Lyon builds his fund around four pillars, with cash joining strong international brands, inflation-linked government bonds and gold.

In his latest investor update, Lyon says it “is not surprising” that he receives queries about the fund’s sizeable cash holding given that the stockmarket bottomed out some four years ago.

He says: “The fund’s liquidity has been rising as we have found fewer appealing investment opportunities. In a world where most asset prices have risen, thanks to loose monetary policy, it is becoming harder to truly diversify.

“Whereas in 2000 or 2008, bonds offered diversification from equities, and even positive returns in a falling market, today this safety may prove illusory.”

Troy Trojan has a 25 per cent allocation to international equities, with another 9 per cent in UK stocks. Some 15 per cent is held in UK inflation-linked bonds and 13 per cent is in US inflation-linked bonds, with 11 per cent in gold.

Lyon argues in the current environment few assets have the ability to protect investors from both deflation and inflation. He also predicts that inflation will rise in the years ahead, although he says that “deflationary shocks” cannot be ruled out along the way.

He says: ’“This leaves cash – the most loathed of assets – as king, providing dry powder should both equities and bonds fall from their highs.”

Bestinvest business development and communications managing director Jason Hollands says this tactical call by Lyon could reap rewards in the short term given the “froth” being seen in the market at the moment.

Hollands says: “This fund is managed with a strong focus on capital preservation rather than relative performance. It is unsurprising that after a stellar run for riskier assets and squeezed bond yields Lyon has decided to hold a large weighting in cash until he can see better value.

“For investors taking a long-term strategic view, cash isn’t king, it is a wasting asset because of the confluence of record low interest rates and above trend inflation. However, this isn’t at odds with taking shorter term tactical view on the valuation of risk assets.”



Think tank calls for savings-based unemployment welfare

A think tank has called on the Government to implement a new system of unemployment support based on compulsory savings backed up by guarantees from friends and family.  The Social Market Foundation says the system would require all citizens to open a “lifecycle account” into which they would save a compulsory percentage of their monthly […]

HMRC issues additional rebate tax guidance

HM Revenue & Customs has issued additional guidance about when tax is payable following questions over the tax treatment of rebates. HMRC ruled in March that tax would be payable on platform rebates from 6 April. In a guidance note, published yesterday, it confirmed payments from fund managers to life companies will not be taxable, […]

Guarantees in the retirement income market

Lorna Blyth, Royal London  Do guarantees benefit customers and, if so, when? To answer this conundrum we commissioned Millimans, a global actuarial consulting firm, to conduct an independent review of the UK retirement income market and whether guarantees really do offer customers better value for money. The brief The study was one of the most comprehensive undertaken […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm