We’re cautious about AI, but these are the shares we’re backing

Gabrielle Boyle, fund manager of Trojan Global Equity O GBP Acc, explains how she is carefully navigating the artificial intelligence (AI) theme, including recently buying Amazon on the grounds that the firm is wrongly perceived as “a laggard, or behind in the AI race”.

Boyle talks through other AI-related exposure, explaining that she focuses her attention on “really rare and special businesses that can grow at high rates of return”, as well as running through other portfolio activity in 2025.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

Kyle Caldwell, funds and investment education editor at interactive investor: Hello and welcome to our latest Insider Interview. Today in the studio I have with me Gabrielle Boyle, manager of the Trojan Global Equity fund. Gabrielle, thank you for coming in today.

Gabrielle Boyle, fund manager of Trojan Global Equity: Thank you for having me.

Kyle Caldwell: So, Gabrielle, let’s kick off with how the fund invests, and can you explain how the fund invests in conjunction with Troy Asset Management’s wealth preservation investment philosophy?

Gabrielle Boyle: So, the fund is very consistent with Troy’s wealth preservation philosophy, as you say, which is really all about protecting and growing our investors’ capital over the long term.

It’s a fully invested equity fund. Our starting premise is that we believe that equity markets persistently underestimate the compounding power of really rare and special businesses that can grow at high rates of return, can reinvest at high rates of return.

And we want to own those businesses, let the power of compounding do the work for us, own them with conviction, but not overpay for them. And it’s that balance between really strong, special, very profitable companies that can compound and throw out those cash flows that will benefit us as shareholders, but not overpaying so that we can get that protection and avoid those huge drawdowns that you inevitably see in equity markets.

Kyle Caldwell: In terms of the investment style, would you summarise it as investing in high-quality growth businesses?

Gabrielle Boyle: Yes, ‘quality’ is a much abused term, as you know, and it’s very much in the eye of the beholder. But we’re wanting to own the businesses that are really profitable, that are generating cash, that have high margins, that have high incremental returns on capital.

Critically, what we’re wanting to do is own companies that are innovating and are able to grow at those high rates of return, so where they are reinvesting at those high rates, so that they can sustain that growth into the future. But also we don’t want to pay too much for them. So, it’s that balance between very high financial productivity, growth and reinvestment, and innovation and valuation.

• ii Tech Focus: SpaceX, Nvidia, Oracle, Iren, Micron
• 2026 look ahead: CHAOS or CALM?

Kyle Caldwell: And does the overall portfolio, the high-quality nature of the portfolio, does that mean that the fund performs well when we have periods of stock market weakness?

Gabrielle Boyle: Yes, we would expect so. I mean, markets are very unpredictable, as you know, and we’ve been in a pretty extraordinary period for global equity returns.

So, if we look back over the life of the strategy, there have been six drawdowns greater than 10%, which is quite unusual, really.

The strategy the fund has defended in five of those occasions, so it’s gone down less than the market, which is what you would expect from a Troy fund. The one exception was in 2022, where we had very extreme market conditions. And, actually, within the fund we took the opportunity to reinvest in companies like Meta Platforms Inc Class A (NASDAQ:META, for example, through that period, which laid the seeds for strong performance in 2023.

Kyle Caldwell: You mentioned Meta. I’m now going to come on to the so-called Magnificent Seven stocks, as I noticed that you’ve initiated a new position in Amazon, and one of the reasons why you’ve bought the company is on the grounds of it being an artificial intelligence (AI) laggard. Could you explain why?

Gabrielle Boyle: Yes, so we started a small position in Amazon.com Inc (NASDAQ:AMZN). The shares haven’t done very much this past year, while AI has obviously been such an incredible focus of attention, and the markets somewhat seems to have taken the view that Amazon are a laggard or behind in the AI race.

We think the market’s misinterpreting that. We think Amazon’s actually in a very interesting and unique position. It’s obviously the provider of cloud infrastructure, which is the backbone of AI through its Amazon Web Services (AWS) business. It has got, clearly, a really interesting business in the retail space, which is where they’ve invested very heavily, and that puts them in a great position.

Their advertising business is coming through, which is very profitable and it’s improving the profitability of Amazon overall, which has always been a concern of ours. But I think the other thing to say about AI with Amazon is that it’s quite unique in that it’s a cloud infrastructure provider, so they’re investing in the infrastructure which they sell to other companies, but then they benefit themselves through their own retail and advertising business through the application of that investment.

So, if you like, it’s a sort of double whammy and that’s quite interesting for us. So, we’ve started small and we’ll wait and see.

Kyle Caldwell: In terms of other Magnificent Seven exposure, you have Alphabet as the top holding, Microsoft is the third-biggest position, you’ve also touched on Meta. Do you still own Meta, and could you summarise your overall views on those three companies?

Gabrielle Boyle: Yes, so people talk about the Magnificent Seven and it’s interesting because they are put together because they are large companies, but, actually, they all have very unique characteristics going on.

We do own Alphabet Inc Class A (NASDAQ:GOOGL), it’s our largest holding. We own Microsoft Corp (NASDAQ:MSFT), we own Meta, and now we own Amazon.

But we don’t own the hardware companies, so we don’t own Apple Inc (NASDAQ:AAPL), we don’t own NVIDIA Corp (NASDAQ:NVDA), and we don’t own Tesla Inc (NASDAQ:TSLA), which is down a lot this year.

We’ve owned Alphabet for a very long time and it’s been a fantastic investment for us, and we can talk about that all day, actually, to be honest. But you know, suffice to say the fundamentals are really interesting. We think it’s got a unique position in AI, which is now coming to pass.

For a long time it was seen as being behind in the AI race, but we’ve now seen with the launch of Gemini 3 and lots of other initiatives by Alphabet that things are going well. We think that reinforces the moat around the search business. We think they have a massively under-monetised asset in YouTube.

They are a big beneficiary through the Google Cloud, through the whole infrastructure story, and that’s before you even get into talking about Waymo and things like that. So, it’s a really interesting business. Shares have done very well. We’ve taken quite a lot of money out of Alphabet, actually.

On Microsoft, Troy have been investors in Microsoft for well over a decade. It’s been a fabulous investment for us. They are a key player, again, in that whole enterprise space. They are kind of a provider of the nuts and bolts of application of technology and AI in the enterprise, and we think very uniquely positioned for that.

The shares have done well over an extended period of time. Actually, not so exciting this year, but we have also taken profits out of Microsoft.

• Five macro themes tipped to shape markets in 2026
• Watch our video: ARK Invest’s Cathie Wood on performance, Nvidia and China

Kyle Caldwell: In terms of AI, there’ll, of course, be losers as well as winners. There are some concerns at the moment over the valuations and there being a potential bubble in some areas of AI. What are your thoughts on that, and how do you try and mitigate that risk?

Gabrielle Boyle: Look, we’re naturally cautious at Troy. We’re always recognising, as we said, that our job is to protect and grow our investors’ capital. I’ve been doing this job a long time, there are definitely bubble-type behaviours here, quite speculative behaviours, which give us cause for concern.

In our portfolios we’re exposed in a couple of different ways. We own some companies that are at the vanguard of AI, like Alphabet, for example, that are investing in the technology and providing the infrastructure and innovating.

But then we also own companies that are utilising AI and those companies actually have not been rewarded thus far. So that’s companies like, for example, RELX (LSE:REL) and London Stock Exchange Group (LSE:LSEG), whose shares have been quite weak this year.

Actually, we think that they are going to be quite interesting because the application of AI gives them interesting monetisation opportunities, but the market’s not really been recognising that yet. But, in answer to your question, we’re nervous, we proceed with caution, and we just have to navigate this very carefully.

Kyle Caldwell: Is it ultimately ensuring that you are comfortable with the valuations that are attached to these companies?

Gabrielle Boyle: Absolutely, absolutely. And that’s one of the reasons why we’ve taken profits in some of these companies because the valuations are richer than they have been for some time. And it’s one of the reasons why we don’t own some of the other names because we can’t get comfortable with the valuation.

Kyle Caldwell: It’s a concentrated portfolio of around 30 stocks. How often do you make changes to the fund? And could you run through other portfolio activity in 2025? You’ve already mentioned Amazon. What other changes have you made to the fund?

Gabrielle Boyle: So, you’re absolutely right, it’s a concentrated portfolio. We’re long-term investors. So, our typical holding period has over the longest time been just shy of nine years. So, what that means in practice is, if you look at the S&P 500, for example, the typical ownership period is nine months, whereas we’re owning our companies for nine years.

We have a much, much longer time horizon, and many of the big winners in our portfolio have been compounding for over a decade. So, that’s something that that we love to see.

We have this year bought Amazon, we’ve sold three companies in the portfolio: Medtronic (NYSE:MDT), Unilever (LSE:ULVR) and Fiserv Inc (NASDAQ:FISV). We’re long-term investors, but we’re not inactive.

Kyle Caldwell: In terms of sectors, a quarter of the fund is in financials. It’s a broad sector. Could you explain the subsectors or types of companies you own within that sector?

• Five top share trades for 2026
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

Gabrielle Boyle: Yes, so financials is a catch-all term. What we’re invested in, essentially, is payments companies and financial information providers.

We don’t own banks and we don’t own insurance companies. So, what we’re owning there is companies like Visa Inc Class A (NYSE:V) and Mastercard Inc Class A (NYSE:MA), which are essentially owning the kind of rails of commerce. They basically take a toll on spending, whether it be in e-commerce or when you’re using your card to tap to pay, etc. They are the kind of plumbing of the financial system to a large extent.

And then we own financial information providers, companies for example like Moodys Corp (NYSE:MCO) and S&P that sell very high-value services and, again, those companies have compounded their revenue and earnings at very nice mid-teens rates over the long period that we’ve been invested in them.

Kyle Caldwell: Gabrielle, thank you for your time today.

Gabrielle Boyle: Thank you very much.

Kyle Caldwell: So, that’s it for our latest Insider Interview. For more videos in the series, do hit that subscribe button and please let us know what you think. You can comment and hopefully I’ll see you next time.