The Company’s investment objective is to seek to achieve long-term capital growth with some potential for income.
Investment Manager’s Commentary
Your Fund returned -0.5% during the month compared to +0.1% for the MSCI World Index NR (£).
With another strong set of quarterly earnings during the month, Microsoft’s shares added to their big gains made in 2017. When Troy first invested in the company in 2010, amidst fears of heightened competition, we correctly assumed that users would prove loyal to Microsoft’s products. What we didn’t fully appreciate at the time was the investment the company was making to become a leader in cloud computing. The delivery of its software over the internet has deepened and broadened Microsoft’s existing customer relationships. Its Office suite is becoming more sophisticated by integrating with new methods of online communication, cybersecurity, business analytics and, eventually, artificial intelligence. Moreover, by renting its computing power to others, Microsoft has entered the very large database market previously owned by its rivals. The transition to cloud services has a long way to go before it matures and as it gains in scale it has the power to accelerate group revenue growth at improving profit margins. In the last six months, Microsoft has grown its revenues and profits by double digits, and increased its free cash flow by +14%, much of which goes back to shareholders in dividends and buybacks. There is $54bn of net cash sitting idle on the balance sheet ready to be deployed. These facts help to justify a share price which has substantially re-rated. At a free cash flow yield of 4.8% we still see reasonable value in the shares.
Total Gross Assets: £100,583,204 (As at 31.01.18)
NAV Frequency: Daily
Legal Status: Open Ended Investment Company
IMA Sector: Global
Dividends: February and August
Investment Manager: Troy Asset Management Limited
Authorised Corporate Director: Carvetian Capital Management Limited