The latest fund tip, hand-picked by our Investment Guidance team.
Fund of the Month November 2019
Reasons to buy
- The team is widely regarded as one of the leading Sustainable and Responsible Investing (SRI) teams in the industry having worked together for more than 18 years.
- The managers focus on high quality companies with strong and dependable growth prospects which promote or benefit from sustainable economic development.
- The funds multi-asset structure ensures a well-diversified portfolio resulting in a steady overall return.
- Long and impressive track record outperforming both the sector and benchmark consistently over 1, 3, 5 and 10 year periods with first quartile performance.
Things to be wary of
- Diversification of multi-asset funds means they capture some of the upside in a market rally but are likely to be outperformed by some single asset class funds.
- The fund has holdings which are denominated in currencies other than Sterling and may be affected by movements in exchange rates.
About the fund
The fund aims to achieve long term growth and to produce some income by investing in a broad range of worldwide investments. This is a multi-asset product and typically will invest between 45% and 85% in equities and up to 55% in bonds and cash.
Managed by Peter Michaelis and Simon Clements, both of whom have a depth of experience in sustainable investing, Liontrust’s Sustainable Investment team have worked together for more than 18 years and are widely regarded as one of the leading SRI teams in the industry.
The companies SRI process is central to the management of this fund. The fund is run on the belief that in a fast-changing world the companies that are likely to thrive are the ones which improve people’s quality of life. The managers believe that companies who are exposed to these growing, powerful trends offer the most attractive and sustainable investment potential.
The team’s investment approach identifies high quality companies with strong and dependable growth prospects aligning to three mega trends - better resource efficiency, improved health and greater safety and resilience – and 20 underlying themes within these trends. ‘Better resource efficiency’ looks for companies who improve the efficiency of energy use, improve water management, increase waste treatment and recycling. ‘Improved health’ incorporates companies who provide affordable healthcare, enable innovation in healthcare, deliver healthier foods and build better cities. The final theme is ‘Greater safety and resilience’ and looks for companies leading ESG management, who ensure a sustainable economy, improve auto safety, enhance digital security and encourage better monitoring of supply chains.
Companies chosen for the portfolio will exhibit robust business fundamentals, excellent management and strong growth prospects. The team also has an active approach to engagement and voting and in 2018 conducted over 200 company visits.
Every four months the managers meet with an external advisory committee of 5 individuals who provide guidance in areas of social and environmental impact and the suitability of the fund’s holdings.
Portfolio positioning and performance
The portfolio is split between UK equities, World ex UK equities, UK government bonds, corporate bonds and cash. The managers allocate approx. 35% to each equity category and 10%-15% to each fixed income category. The fund will typically hold between 40 and 60 equities typically with a growth style bias and this concentrated portfolio indicates a high degree of manager conviction. When identifying fixed income the managers focus on risk avoidance by investing predominantly in corporate bonds with high quality issuers believing this to reduce bond-specific risk.
Whilst past performance is not a guide to future performance the fund has a long and impressive first quartile track record outperforming both the sector and benchmark over both 1,3 5 and 10 years on both a cumulative and discrete basis.
The funds multi-asset structure ensures a well-diversified portfolio allowing the fund to take advantage of market volatility, capturing market upside while cushioning capital during a market downturn. Investors should note that due to this diversification the fund may be outperformed by a single asset class fund in a market rally.
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