Liontrust Sustainable Future Managed
Liontrust Sustainable Future Managed fund aims to deliver capital growth over the long term (five years or more) through its own sustainable process and by investing in a combination of global equities, bonds and cash. The managers use a thematic approach to identify the key structural growth trends that will shape the global economy of the future, across a 40-60 stock portfolio.
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Peter Michaelis joined Liontrust in April 2017 following the acquisition of Alliance Trust Investments, where he was Head of Investment. With over 20 years in Sustainable and Responsible Investment, Peter began his career as an Environmental Engineer at the Steel Construction Institute after completing a PhD in Environmental Economics. He then worked at Henderson Global Investors as a Sustainable and Responsible Investment Analyst and Assistant Portfolio Manager. In 2001, he moved to Aviva Investors, eventually becoming Head of Sustainable and Responsible Investment. Peter holds an MA in Physics from Oxford University, an MSc in Energy and Environmental Engineering from the University of Sussex, a PhD in Environmental Economics from the University of Surrey, and the CFA Society of the UK Investment Management Certificate (IMC).
Simon Clements joined Liontrust in 2017 following the acquisition of Alliance Trust Investments, where he worked for 5 years. Previously, he spent 12 years at Aviva Investors (formerly Morley Fund Management), where he was Head of Global Equities. Early in his career, Simon worked as a Portfolio Accountant and Risk and Performance Analyst before joining Aviva Investors in 2000 to develop its global equity and SRI propositions. He is the lead manager of the Liontrust SF Global Growth Fund, GF SF Global Growth, and SF Managed Growth Fund, and co-manages the SF Managed, SF Cautious Managed, and SF Defensive Managed funds. Simon holds a Bachelor of Economics from the University of Newcastle, Australia, a graduate diploma in Applied Finance & Investment from the Securities Institute of Australia, and is a CFA Charterholder.
Peter Michaelis joined Liontrust in April 2017 following the acquisition of Alliance Trust Investments, where he was Head of Investment. With over 20 years in Sustainable and Responsible Investment, Peter began his career as an Environmental Engineer at the Steel Construction Institute after completing a PhD in Environmental Economics. He then worked at Henderson Global Investors as a Sustainable and Responsible Investment Analyst and Assistant Portfolio Manager. In 2001, he moved to Aviva Investors, eventually becoming Head of Sustainable and Responsible Investment. Peter holds an MA in Physics from Oxford University, an MSc in Energy and Environmental Engineering from the University of Sussex, a PhD in Environmental Economics from the University of Surrey, and the CFA Society of the UK Investment Management Certificate (IMC).
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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.
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Quote from the Fund Manager
The only real difference between investors is time horizon and we continue to focus on the long-term growth potential of cashflows.
Peter Michaelis
Co-Manager
Investment process
This portfolio can hold 60-85% in equities (this includes 30-60% in global equities ex-UK and 20-45% in UK equities), 0-40% in bonds (up to 25% in corporate bonds and 30% in gilts) and up to 10% in cash.
Every investment in the Sustainable Future fund’s range has to meet four set criteria: thematic drivers, sustainable credentials, good fundamentals and attractive valuation.
The investment process begins with a thematic analysis designed to uncover emerging trends and long-term structural growth themes. These range from the development of personalised medicine to the transition to lower carbon fossil fuels. The team believes many of these outcomes have been delivered by the power of capitalism and the creativity of businesses generating profit growth and investment returns.
Three mega trends have been identified, with strong and dependable growth prospects. These are: better resource efficiency (cleaner), improved health (healthier), and greater safety and resilience (safer). Within these three buckets the team has identified 20 areas of predictable and resilient growth.
The team then undertakes a sustainability analysis for each company and also determines the key environmental, social and governance (ESG) factors that are important indicators of future success. The team then assesses how well these are managed through its proprietary sustainability matrix – which allows the managers to rank a company based on its sustainability processes and the quality of its management.
The third stage covers fundamentals, with the team ensuring the companies it invests in have robust business fundamentals with proven ability to deliver high returns on equity through sustaining margins and asset turnover.
The final stage is valuation. The team likes to integrate its view of quality into these businesses, predicting the likely sales, earnings and other financial returns it expects to see from these companies over the next three to five years. The team specifically target a return in excess of 10% per annum.
On the fixed income side, the managers aim to produce an income yield, with the prospect of some capital growth, by investing predominantly in corporate bonds and by actively managing the interest rate exposure.
Risk
The majority of risk is derived from stock selection within the portfolio, with asset allocation contributing up to 25% of the risk. The resulting portfolio consists of 40-60 holdings spread across the breadth of the team’s investment themes. Position sizes are determined according to risk, reward and sustainability. The team can – and does – invest in some of its other managed sustainable funds within the portfolio.
ESG
ESG - Explicit
ESG is a primary feature of Liontrust’s investment strategy on this fund and the managers have built sustainability into the stock selection process through three main stages: Thematic analysis, ESG analysis and Company Engagement.
Thematic analysis is the starting point for idea generation and all companies must be aligned with at least one of three themes: better resource efficiency (cleaner), improved health (healthier) and greater safety and resilience (safer), and 21 themes within these. Sustainability analysis assesses the whole company in two dimensions – the set of products or services offered; and the management of ESG exposures relevant to that industry sub-sector. This uses sustainability to identify companies with better growth prospects and higher quality management. The team places great importance on company engagement, believing it gives greater insight into how businesses are run and helps identify leading companies. It can also be used as a lever to encourage better business practices.
Furthermore, every team member is responsible for all aspects of ESG and financial analysis relating to each investment decision.
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