No fund that invests in equities is immune to stock market shocks. But some, managed with a focus on capital preservation, are designed to withstand corrections better than others.
Among this conservative cohort of equity funds is STS Global Income & Growth, run by boutique asset manager Troy Asset Management, a group that spends as much time on protecting investors’ capital as it does in growing it.
STS Global, a stock market-listed investment trust, has a market value of £281 million and is managed by Troy’s James Harries and Tomasz Boniek, part of a 13-strong team that looks after some £11 billion of assets.
Troy took control of the fund nearly five years ago, and boosted its assets about 18 months ago by merging it with fellow trust Troy Income.
‘Our objective is to deliver investors a growing income stream from a diversified portfolio of international equities,’ says Harries. ‘We do this without taking big risks with investors’ capital, though the aim is long-term, steady capital growth.
‘It’s an approach that appeals to those whose investment capital is irreplaceable.’
So far Troy has delivered on both fronts. In the four full financial years that it has run the trust, it has grown the annual income from 5.88p a share to 8.37p, an increase of 42 per cent.
To put these payments into context, the trust’s shares are currently priced at around £2.40.
In the current financial year – to the end of March 2026 – its first quarterly dividend of 2.1p compares with an equivalent payment 12 months previously of 1.586p. This suggests that the trust is on schedule to produce another year of dividend growth.
Harries says: ‘We want to keep growing the dividend payments to shareholder. We need to protect investors from persistent inflation. While we want the underlying investments to provide this dividend growth, we will top up payments from the trust’s reserves if necessary.’
Currently the trust has the equivalent of half a year’s dividends in reserve, which can be drawn upon any time to top up the income from its equity holdings.
In terms of overall returns, they are ‘steady’ – respectively 7.8, 20.8 and 44.6 per cent over the past one, three and five years. That’s less than the returns from the average global equity income trust (7.9, 44.3 and 66.3 per cent) but not surprising in light of Troy’s safety-first approach.
Harries is worried about the backdrop to equity markets – concerns fuelled by heightened global tensions, volatile bond markets and the threat of recession. And like many, he fears current market euphoria over artificial intelligence (AI) is not sustainable.
As a result, STS’s portfolio, comprising 32 stocks, is very consumer-centric and AI light. A third of the assets are in consumer staples companies – the likes of tobacco giant British American Tobacco and Reckitt Benckiser, owner of household brands such as Dettol, Harpic and Nurofen.
The hope, says Harries, is that if markets correct and recession follows, such companies (and their share prices) will have the resilience and quality to pull through.
Stakes in drinks manufacturer Diageo and Canadian rail freight specialist CNR have been added to recently, while a new position has been taken in US food distributor Sysco. The only ‘magnificent seven‘ holding is in Microsoft.
Annual charges total 0.8 per cent and the shares trade at a small discount, indicating investor demand for a vehicle that is always cautious. Its stock market ticker is STS and ID code B09G3N2.
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