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Troy to merge Spectrum and Trojan Global Equity funds

Troy Asset Management is merging its Spectrum fund of funds into its Trojan Global Equity fund as efforts to cap costs on the Spectrum fund failed to entice investors, International Investment's sister brand Investment Week has learned. 

The £133m Spectrum fund will merge into the £405.5m Global Equity fund on 14 May, according to a letter to shareholders.

The letter stated the Spectrum fund has experienced "steady outflows" in recent years and a review undertaken by ACD Link Fund Solutions and Troy concluded there was "little prospect for altering this trend in the foreseeable future".

As a result of the merger, investors will benefit from a lower ongoing charge, which stands at 1.5% for the Spectrum fund and 0.92% for the global equity fund.

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Since 2015, Troy has been supporting the fund by way of an ongoing charges limitation.

"It was hoped that capping costs borne by investors would help to generate interest in the fund, but this has not happened," the letter stated. "Furthermore, the costs have recently increased owing to a change in the way charges are applied for open ended funds when calculating the ongoing charges figures.

"It is anticipated that the fund will continue to shrink and that remaining investors could (if Troy felt that it was no longer able to support the OCF limitation) be left in a fund in which costs are mounting."  

The funds have similar objectives, however Spectrum is a fund of funds, while Trojan Global Equity invests directly in global equities.

In the three years until 27 April, the Spectrum fund has returned 20.7% while the  global equity fund returned 31.1%, according to FE fundinfo.

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