Liontrust Assessment of Value Report - Flipbook - Page 69
Liontrust European Income Fund
The manager of the Fund changed from the European Income team to
the Cashflow Solution team on 2 October 2020. Liontrust is proposing
to merge the Fund with the Liontrust European Growth Fund, which will
be subject to investor and regulatory approval.
Performance
We have assessed the investment performance of the Fund against both its stated investment
objective, as well as against the benchmarks that are set out in its prospectus. We considered
whether the Fund has performed how we and investors would expect it to, given the market
conditions it has been operating under and its investment philosophy, strategy and process.
The Fund has met its yield targets and produced capital growth over the last five years but has
significantly underperformed versus the index and sector. The Fund is a value income fund, but
there is no European Value/Income sector which means when value as a style underperforms,
all value funds are likely to be in the bottom quartiles of the European sector. Despite this, the
Fund has underperformed other European income funds. For the Fund to outperform it would
require a significant recovery in Europe’s unloved ‘value’ stocks especially with the portfolio
tilt towards traditional value sectors like financials. Investors are very aware of the Fund’s
positioning but the Fund’s total return has performed poorly as a result. Due to the scale and
length of the period of underperformance, the conclusion must be that, despite meeting the
yield requirements, the Fund has not met investors’ expectations.
Quality of service
Our assessment has considered the range and quality of services experienced by investors.
We have concluded that the quality of services provided by Liontrust is better than or in
line with expectations across all the UK-domiciled funds. This has been evaluated through a
detailed review of the services we provide, our engagement with investors, communications
and governance, and confirmed through our investor survey.
General costs of authorised fund manager
We have reviewed the breakdown of the charges of the Fund’s Ongoing Charges Figure (OCF)
and our explicit transaction costs. Our assessment has concluded that the Fund’s charges are
reasonable and the costs of services provided to the Fund are being appropriately managed.
Research costs have been absorbed by Liontrust and are not charged to the Fund.
Comparable market rates
We have assessed the charges of this Fund against comparable funds in the market. Our
assessment has concluded that, overall, the charges of this Fund are in line with other
comparable funds available in the market.
Overall value
assessment
We have evaluated the Fund
against all seven criteria in
our assessment of the value it
provides to investors. While
the Fund has received an
Amber for performance,
the managers changed in
October 2020 and we have
concluded that the Fund
has performed in line with
or exceeded expectations,
especially in terms of the
income it has generated, and
therefore delivered overall
value to investors.
Economies of scale
Our assessment has considered whether we are able to generate efficiencies to achieve
economies of scale and if such cost savings have been passed onto our investors. The
Fund benefits from a fixed Administration Fee model, which, as well as providing clarity
in relation to fund costs to investors, allows cost savings achieved from an increase in the
Fund’s size to be directly passed to investors through the application of a discount. As the
Fund grows in assets above £500 million, the fixed Administration Fees are reduced by up
to a maximum of 0.06% above £5 billion in assets. Overall, with the growth in Liontrust’s
assets under management over the past few years, our investors have been able to benefit
from the savings created.
Comparable services
There are no Comparable Services provided for this Fund.
Classes of shares or units
Our assessment has considered whether investors are invested in the most appropriate share
or unit class that is available to them. Based on the information available to us, our review
concluded that it is appropriate for investors in this Fund to be invested in the unit class they
are currently invested in.
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