Fund of the week: bearish Lyon bites into gold

Troy Asset Management's Trojan fund skips between equities and other asset classes as it sees fit. And gold is now figuring highly.

Sometimes it pays to be bearish. Convinced that the debt-fuelled boom couldn't last, Sebastian Lyon hasn't held a bank in his £198m fund, the Troy Asset Management Trojan fund, for more than five years. Indeed, up until recently, as little as 25% was invested in equities. "We saw the 2003 to 2007 move in the markets as a bear-market rally," says Francis Brooke, a director at Troy. It was a good move. The fund rose 1.1% in 2008, against a 29.9% drop for the FTSE All-Share.

Given this sceptical outlook on stocks, it's notable that by the end of last year, 69% of the fund was invested in them. "If you look at the return on equities over the last four decades, the huge premium built up in the 1990s has now been eroded." Stocks look quite reasonably valued when compared to cash and other assets, says Lyon, with big consumer and energy stocks, such as Tesco, Centrica and National Grid, the most likely to rally when the market does. "We don't buy mid-cap or recovery stocks."

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Swipe to scroll horizontally
Lyxor Gold Bullion8.01
BP5.12
Royal Dutch Shell B Ord4.53
Alliance Trust Plc4.34
British American Tobacco3.85
Reynolds American Inc3.86
Centrica3.37
Johnson & Johnson3.38
Tesco2.49
National Grid2.20
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.