Liontrust SF Managed Funds Sales Aid - Flipbook - Page 10
The process behind the performance
Equities
The Liontrust Sustainable Investment team’s process starts with a
thematic approach in identifying the key structural growth themes
that will shape the global economy of the future and then invests
in well-run companies whose products and operations capitalise
on these transformative changes and, therefore, may benefit
financially. The team believes identifying these powerful themes
and investing in exposed companies can make for attractive and
sustainable investments.
Instead, every team member is responsible for all aspects of
financial and ESG relating to an investment decision.
Identifying emerging and long-term themes is often referred to as
positive screening because of the team’s focus on what they want
to own rather than just what to avoid, and is one of the three main
approaches to managing ethical and sustainable funds.
Bonds
Macroeconomic analysis is used to determine the team’s top-down
view of the world and this helps shape all aspects of portfolio
construction and appetite for risk. After this, the managers aim to
focus on high-quality issuers and believe this can reduce bondspecific risk. Their assessment of quality is a distinctive part of the
process, in which they combine traditional credit analysis with a
detailed sustainability assessment based on the proprietary model.
The second approach is engagement, also known as active
ownership. In this case, fund managers engage with the companies
they hold so they can influence management into changing
their strategy or operational management. The third approach is
avoiding certain industries because of the negative effects of their
products, such as tobacco companies and producers of weapons.
The Liontrust Sustainable Investment team combines all three
approaches in the investment process. Central to the approach
is the fact all these elements are integrated within a single team.
They do not have separate fund management and ESG divisions.
Companies identified by the process exhibit four characteristics:
exposure to one or more of our investment themes; excellent
management and core products or services that are making a
positive contribution to society; a business model that enables
them to grow profitably from these trends and generate competitive
returns and an attractive valuation.
The managers assess individual bonds for whether they believe they
offer attractive long-term returns and for absolute and relative valuations.
The managers seek the best value bonds issued by the high-quality
issuers identified, looking at bonds issued across the capital
structure, along the maturity curve, or issued into the primary credit
markets (UK, US and Europe).