Liontrust is a long term active fund management company that uses proprietary investment processes to identify and hold companies for our clients for the medium to long term. Our funds have a low average turnover - i.e. our average investment in a company is a number of years, and many companies have been held for much longer. Investing in companies over the long term emphasises the need for good governance and stewardship.
At the heart of the Liontrust culture are the proprietary investment processes that each team develops and applies to the management of their funds. Liontrust believe investment processes are key to consistent long-term performance and effective risk control. Each team have determined the key factors and processes that will drive stock selection. As part of this, portfolio managers are responsible for performing appropriate due diligence on their investments and this will, at a minimum, include regularly reviewing various aspects of a company including the strategy, performance, risk, capital structure and corporate governance. There is a recognition that these factors impact the long term returns of companies.
Liontrust recognises that good governance & stewardship, sustainability and social impact is important to stock selection and longer term performance. Liontrust investment teams take a holistic approach that aims to include any information in our investment decisions that could be material to investment performance which includes ESG factors - these factors are taken into account as there is a recognition that they may have a material effect on the returns delivered to clients. There are a number of core principles we apply across the whole of our fund range, these include:
- A minimum standard of governance and behaviour of what we expect from companies we invest in;
- Support from a central Governance and Stewardship team;
- A commitment to the FRC's Stewardship Code;
- Active voting in line with clearly articulated voting policies; and
- Tools and training to support identification of ESG risks and opportunities.
In 2019, Liontrust engaged MSCI ESG manager for all investment teams providing ESG ratings, ESG controversy monitoring and carbon analytics of all portfolios, which empowers our investment managers to consider ESG issues in their decision making processes.
A responsible investment strategy is currently being developed for Liontrust. In January 2020, Liontrust established a Sustainability and Stewardship Committee "SSC" chaired by the Chief Executive Officer reporting into the Board of Directors, the SSC is supported by a Working Group with representatives from the firm to enable the implementation of our investment strategy.
Liontrust are in the process of producing its first Sustainability report for 2019, to be published in Q2 2020.
Liontrust have a single specialised Sustainable Investment Team who, as at the 31st December 2019, manage 28% of Liontrust's AUM. The Sustainable Investment Team fully integrate ESG issues into their investment process, taking a thematic approach to identify investment opportunities that are making a positive contribution to society (environmental, social and governance (ESG) factors).
Liontrust signed up to the PRI in April 2018, however the Sustainable Investment team have been signatories for a number of years and are represented on a number of PRI working groups to include PRI Cyber Security, PRI Sustainable Palm Oil Investor Working Group, PRI Global Investor Taskforce on Tax & the PRI Tax Advisory Committee and the PRI SDG and Active Ownership Committee, PRI Listed Equity Advisory Committee and PRI Working Group for a Just Transition.