Introduction to Liontrust - Flipbook - Page 17
Investment process
At the core of the team’s investment approach is deep, fundamental
research driven by original thinking to find share price inflection
points that can drive long-term performance. The managers look for
distinct inflection points and drivers of returns for the different funds.
How they apply this approach differs from fund to fund.
Global equity strategies
This process is based on the philosophy that where multiple changes
coincide, opportunities open up for investors. Tom Record and his
team look for companies that are exploiting change to become
stronger, better and more highly valued in the future. The changes
that the companies within the funds seek to exploit sit along a range.
At one end is External Change. The catalysts for External Change are
wide ranging and may include the arrival of a new technology that is
transforming an industry, environmental change or a socio-economic
or demographic change that may take years to work through.
At the other end of the range is Internal Change. These changes
enable a company to re-engineer itself so that its future is very different
from its past. Often these are contrarian investments where we have
confidence that management will rebuild a company after a tough
recent past. Internal Change catalysts include restructuring, closing
business lines, or pivoting to new business models and products.
Tom Record and his team seek to identify companies that can exploit
multiple change catalysts as they believe this is often when change is
most pronounced and the potential opportunity most advantageous.
Tortoise long/short strategies
Matthew Smith and Tom Morris invest globally and aim to deliver
a positive absolute return over rolling three-year periods. The fund
managers combine a bottom-up stock picking process with detailed
study of the macro environment and generally take a value-oriented
approach to investing.
UK equity income strategies
The fund managers invest in high-quality dividend paying companies
with competitor powers. Their building blocks of quality include strong
and improving returns on capital, clean cash-generative financial
models, prudent balance sheets, attractive underlying markets, and
skilled and motivated management. Companies with at least one of
seven competitor powers have strong strategic traits that underpin
persistent and predictable profitability.
Emerging Markets strategies
The fund managers focus on emerging leaders, which are companies
that are well positioned to prosper in a world of rapid change. Given
many disruptive products and business models have arisen in developed
markets, their introduction and adoption rates across emerging markets
are driving considerable growth at a consumer and commercial level.
Therefore, emerging leaders alone have the resources and capabilities
to survive and prosper given the huge levels of disruption seen across
the whole economy. A common feature is their ability to create value
for customers (either via a lower price and/or higher quality product
and management that are focused on driving continuous improvement)
and capture value for itself and its shareholders via a sustaining moat
(such as unique assets, efficient scale, technology leadership, R&D
investment and customer switching costs).
Risk
Monitoring
Idea
Generation
Portfolio
Construction
Purpose
To make money
for our clients,
responsibly
Fundamental
Research
Resiliency
Engagement
Liontrust investment teams and funds - 17