Liontrust Assessment of Value Report - Flipbook - Page 9
5. Economies of Scale
As funds grow in size certain cost savings may be achieved. These
savings are known as economies of scale and are generated as
some costs are either fixed or increase at a lower rate compared to
the growth in the overall assets under management. Our assessment
has considered whether Liontrust is able to generate efficiencies
to achieve economies of scale and whether any such savings are
passed onto our investors.
In 2018, we started moving our funds to a fixed Administration Fee
model and this was extended earlier this year with the Global Equity
funds we acquired as part of the acquisition of Neptune Investment
Management in October 2019. This move was to provide our
investors with both greater certainty over the charges they can expect
to pay as well as the assurance that they will directly benefit from
any cost savings achieved as a result of the fund growing in size.
The Administration Fee for each fund is discounted as the fund grows
in size, thereby allowing us to pass on cost savings achieved as a
result of an increase in the fund’s assets directly to the fund’s investors.
In addition to fund-specific economies of scale, we consider whether
we are able to achieve greater efficiencies in our operations across
all our funds through our service providers, how funds benefit from
being part of a larger business and whether we are able to ensure
cost savings are achieved on an ongoing basis.
6. Comparable Services
We have assessed whether the charges paid by investors in our
UK-domiciled funds are reasonable compared to what our other
investors pay when investing into other Liontrust products or services
with similar investment objectives and policies. These products and
services include our Ireland-domiciled pooled funds and ‘segregated
mandates’, which are bespoke accounts set up for large institutional
investors such as pension funds.
We identified which of our UK-domiciled funds have comparable
products and services and assessed any differences in charges.
Where differences were identified, we considered the reasons
for these with the aim of ascertaining whether investors in the UK
fund are charged appropriately relative to other investors in the
comparable pooled funds or segregated mandates.
7. Classes of Units
We offer a range of different share classes to our investors,
reflecting the different ways in which our investors choose to
invest and the services they receive from us. Our assessment of
this criterion has considered whether share classes within each
fund are appropriately priced, and whether investors are invested
in the most appropriate share class that is available to them. We
have also considered how we ensure ongoing appropriateness of
pricing and whether investors remain in the most appropriate share
class. To conduct the assessment, we have leveraged existing
governance and monitoring processes including the regular review
of our private investor base.
Where a potentially better outcome may be applicable for an
investor, we consider whether suitable action, such as offering the
investor a free switch into an alternative class, has been taken within
a reasonable period of time.
The seven criteria have all been considered in
evaluating the assessment of value for each of
the Liontrust funds.
Who made the assessment of value?
The assessment of value of the Liontrust funds has been carried out
by the AFM, which is Liontrust Fund Partners LLP and includes two
independent Non-Executive Directors – Mike Bishop and George
Yeandle:
Mike Bishop
Mike has more than 40 years’ experience as a fund manager and is
currently Senior Independent Director (Chairman of the Nominations
Committee) of Liontrust Asset Management PLC, a Non-executive
Director of RWC Focus Asset Management and an adviser to its UK
equity activist funds. Before joining Hermes in 2005, Mike was Head
of Pan-European Equities at Morley Fund Management Limited and
a Director and fund manager at Gartmore Investment Management.
George Yeandle
George is a Non-Executive Director (Chairman of the Remuneration
Committee) of Liontrust Asset Management PLC. He is a chartered
accountant with over 30 years’ experience having specialised
throughout most of his career in advising clients on executive
pay and remuneration issues. George has also held a number of
internal leadership roles. He trained with Coopers & Lybrand (now
PricewaterhouseCoopers LLP) before being admitted as a partner
in 1989. More recently, George was Operational Leader of the
London Region Human Resource Services Business and a Senior
Partner of PricewaterhouseCoopers LLP, retiring in December 2013.
Liontrust Assessment of Value Report - 9