In a note to investors, the conservative manager said although the firm desired to be more fully invested, unless the market presented it with suitable opportunities, Troy was content to “stay on the side-lines”.
“Uncertainty can lead to temptation,” said Troy chief executive Sebastian Lyon. “Some investors have a tendency to fidget – either to justify their existence or merely out of boredom. Such trades cost money, performance and distract from the overall strategy that is set. In time, you might find stocks in your portfolio that you otherwise would not have acquired and wonder why they were there.”
The warning comes ten years after the launch of the firm’s Trojan fund, which in that time had generated a total return of 143.5% by the end of May.
“The funds remain cautiously positioned,” said Lyon. “We are more optimistic about the next decade. The valuation of equities is considerably lower than in 2001, as earnings have grown, but the work of the secular bear market is not complete. We expect to see single figure price earnings ratios and high dividend yields in a few years’ time, through a de-rating and/or share price falls.”
Lyon added that at present there were “few opportunities” to increase Troy’s equity holdings, but the firm was “very confident that opportunities, as in 2008 and 2009, will present themselves”.