Liontrust Special Situations
Liontrust Special Situations is a high-conviction UK equity fund that invests across the market-cap spectrum, although it typically has a bias towards small and medium-sized companies. The managers use Liontrust's long-established ‘Economic Advantage’ investment process to identify businesses with durable competitive strengths that they believe can deliver sustainable growth over the long term.
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Our Opinion
If you consider the amount of time that Anthony has spent developing the investment process, combined with the skill of the managers and the track record of the Liontrust Special Situations fund it's easy to see why it is so well regarded by those who invest in the UK. For investors wanting high-conviction, multi-cap exposure to quality UK stocks, this fund ranks among the best.
Fund Managers
Anthony Cross, Co-Manager
Anthony Cross joined Liontrust in 1997 and launched the Liontrust UK Smaller Companies Fund in 1998. Before Liontrust, he began his career at Schroder Investment Management as a graduate trainee, later becoming an equity analyst and joining the Smaller Companies team in 1994. Anthony graduated from Exeter University in 1990 with a degree in Politics.
Victoria Stevens, Co-Manager
Victoria Stevens joined Liontrust’s Economic Advantage team in June 2015 as a partner and fund manager, focusing on small cap investment opportunities. Before this, she spent nearly five years at finnCap Ltd, where she was deputy head of corporate broking. Prior to finnCap, Victoria was a senior reporter and diary editor at City AM. She studied Modern Languages at Oxford University.
Matthew Tonge, Co-Manager
Matthew Tonge joined Liontrust's trading desk in 2003 from Barclays Capital Asset Management and became a partner in 2011. He is responsible for executing trades across all the firm’s assets and was named Mid-Tier Trader of the Year by The Trade magazine in 2014 for his work with mid and small cap stocks. In September 2015, after years of working closely with Anthony, he joined the Economic Advantage team to research and analyze small cap companies. Matt graduated with First Class degrees in Manufacturing Engineering and Commerce from the University of Birmingham in 2000, earning the Gilbert Walker Prize for top student.
Risk
The fund is typically very different from the UK stock market, with a significant underweight to large companies. Instead, much of the portfolio has been traditionally invested in small and mid-caps. It may also have large sector underweight or overweight positions. Despite these factors, the fund has actually exhibited lower volatility than the UK stock market, due to Anthony's well-honed investment process. Its focus on quality stocks will cause it to struggle when these are out of style.
Company Description
Liontrust Asset Management was founded in London in 1995 and prides itself on the freedom it allows its managers, who invest in their own portfolios. Listed on the Stock Exchange since 1999, the company's culture is at the forefront of its values. The firm was awarded the Elite Provider for Equities Rating in 2015, 2016, 2019 and 2021.
Quote from the Fund Manager
We are long-term holders of quality companies.
Anthony CrossCo-Manager
Anthony CrossInvestment process
The managers believe the best long-term investments are companies with durable competitive advantage that are difficult for competitors to replicate. These strengths, which Liontrust calls ‘Economic Advantage’, can help businesses grow their market share, maintain pricing power and deliver sustainable earnings growth over time.
Experience shows that the hardest to replicate of these particular characteristics fall into the following three categories of intangible assets: intellectual property; strong distribution networks and significant recurring revenues. The managers then carry out detailed research to identify businesses whose future growth potential they believe is not yet fully recognised by the market.
The team also places great importance on company management. For smaller companies in particular, they prefer businesses where directors have meaningful shareholdings, helping to align the interests of management with those of shareholders.
Holdings are continually reviewed as new information becomes available, allowing the managers to increase or reduce positions as their conviction changes. The result is a high-conviction portfolio of companies that the managers believe can continue to grow regardless of the wider economic environment.
Risk
The fund is typically very different from the UK stock market, with a significant underweight to large companies. Instead, much of the portfolio has been traditionally invested in small and mid-caps. It may also have large sector underweight or overweight positions. Despite these factors, the fund has actually exhibited lower volatility than the UK stock market, due to Anthony's well-honed investment process. Its focus on quality stocks will cause it to struggle when these are out of style.
ESG
The ‘Economic Advantage’ process employed by this fund looks for those businesses with distinctive, hard-to-replicate intangible assets. This does include the analysis of ESG factors, but more to identify the risks and to help with position sizing, rather than as a screen. As such, the portfolio can invest in firms from all sectors and industries, though those with poor ESG credentials will be looked on less favourably than others, all other things being equal.
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