Troy's Lyon: Herding into 'safety' at record highs is not necessarily safe

Valuations at 10-year highs

Sebastian Lyon, manager of the £2.6bn Trojan fund, has been selling out of some of the "more predictable" businesses in the portfolio, as valuations have soared.

At the end of October, Lyon (pictured) reduced his holdings in Altria, Dr Pepper and Reynolds American, which have all performed strongly this year. For example, Altria is up 15.8% year to date, Dr Pepper is up 23.8%, while Reynolds American has risen 42.8% since the start of the year. "There is little room for error," the manager said. "For the more predictable businesses that we favour, valuations are now at ten-year highs in some cases. "Herding into 'safety' at record highs is not necessarily safe." Lyon pointed to the growing number of dividend cuts over the past year, with...