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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Trojan Fund from Troy Asset Management 2025 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Trojan Fund from Troy Asset Management)

Primary Source Intelligence • Q1 2025 Letter Analysis

Trojan Fund from Troy Asset Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Trojan Fund from Troy Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized+6.6%

Positioning StanceConstructive

GeographyUS, Global

Digest Analysis

Quick Take

"Lyon sees Trump's tariffs as destructive trade policy triggering recession and undermining dollar hegemony. Extreme 37x CAPE valuations offer little protection while rising yields challenge equity markets."

Executive Summary

Sebastian Lyon views Trump's tariff policies as a destructive departure from decades of free trade, creating recession risks and undermining US credibility. The manager sees trade wars as highly damaging, raising inflation, hurting consumers, and squeezing corporate margins while creating business uncertainty. Rising bond yields from inflation fears challenge extreme equity valuations at 37x CAPE ratio, with historical precedent suggesting significant downside risk. The dollar's safe haven status is being questioned as foreign investors potentially reduce Treasury and equity holdings, accelerating regime change. Lyon has defensively positioned the portfolio by reducing dollar exposure, shortening TIPS duration, and adding Japanese yen as a safer haven. Despite adding selectively to equities, the manager remains cautious given poor valuations but prepared to increase allocation substantially if recession creates better opportunities. The outlook has shifted from confidence to uncertainty, with recession moving from possible to probable as policies reverse the post-1989 peace dividend and globalization benefits.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

80%

CautiousHigh

High Conviction (80%)

The manager demonstrates high conviction in his macro thesis about trade policy consequences and regime change. He makes definitive statements about tariff impacts, takes concrete portfolio actions based on his views, and expresses strong confidence in his analysis of valuation extremes and dollar risks.

Growth Outlook

13%

BearishBullish

Bearish (13%)

The manager expresses strong pessimism about market conditions, explicitly stating recession risks are rising and have shifted from possible to probable. He warns of extreme valuations, rising bond yields, and systemic challenges to US credibility and dollar hegemony.

Risk Appetite

30%

DefensiveAggressive

Defensive (30%)

The portfolio is positioned defensively with reduced dollar exposure, shortened duration, and addition of safe haven assets like Japanese yen. However, the manager has selectively added 7% to equity exposure, showing some measured risk-taking despite the defensive posture.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

Limited net deployment with selective 7% addition to equity exposure since quarter end. The manager is positioned defensively but maintains readiness for substantial future deployment if conditions improve, indicating measured current activity with significant dry powder preserved.

Forward Guidance

35%

CautiousExpansionary

Cautious (35%)

While prepared to increase equity allocation substantially if recession creates better valuations, the manager's immediate guidance is cautious. He emphasizes being prepared for treacherous waters and expects continued uncertainty, though maintains optionality for future deployment.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is predominantly bearish with terms like 'destructive', 'damaging', 'treacherous waters', and warnings about policy consequences. While some opportunity language exists around selective additions and future deployment, the overall tone emphasizes risks and challenges.

Perceived Risk

85%

Low RiskElevated

Elevated Risk (85%)

Very high perceived risk across multiple dimensions including recession probability, extreme valuations, policy uncertainty, dollar instability, and systemic challenges to US financial hegemony. The manager explicitly warns of rising risks and compares current conditions to historical crisis periods.

Opportunity Density

30%

ScarceAbundant

Scarce (30%)

Current opportunity set is viewed as limited due to extreme valuations, though the manager sees selective bottom-up opportunities and anticipates much better opportunities if recession creates valuation reset. Present environment offers sparse attractive investments.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Strong emphasis on long-term valuations and patient capital approach. The manager acknowledges being early in positioning, focuses on multi-year investment horizons, and is prepared to wait for better opportunities while maintaining long-term perspective on regime change impacts.