Liontrust Assessment of Value Report - Flipbook - Page 16
Improvements to enhance value
We continually review the costs that are incurred and how we can make
improvements or do things differently to enhance the value we provide investors.
We have made a number of improvements over the past year that benefit you as
an investor and these are listed on these two pages.
Clarification of fund objectives and policies
Use of benchmarks for fund performance
Liontrust has made changes to the way we communicate what
our funds are trying to achieve, where the funds invest and how
they invest to achieve their objectives. This included amending the
objective and policy for each of our funds in the Prospectus and
KIIDs (Key Investor Information Document), although there were no
changes to the way in which any of the funds are managed.
We started reviewing the benchmarks we use to compare the
performance of our funds in 2019.
The objective defines what each fund is trying to achieve and over
what time period. The policy explains what each fund will invest in
and where it cannot invest.
We also improved the style and layout to make it easier to read
about the objectives and policies of the funds in the Prospectus.
The way in which we explain the strategy/investment process of
each fund was reviewed and clarified as well where required.
The enhanced way in which we communicate about the objective,
policy and strategy of each fund has been reflected in all our other
literature, documents and the website (liontrust.co.uk).
The performance of most funds is compared against benchmarks to
enable investors to see how their investment has fared on a relative
basis against the market and competitor funds. These benchmarks
are typically an index and the IA (Investment Association) sector of
funds in which they sit.
Our regulator – the Financial Conduct Authority (FCA) – set out
three benchmark categories for funds to use:
• A constraint benchmark: an index or similar factor that fund
managers use to limit or constrain how they construct a fund’s
portfolio.
• A target benchmark: an index or similar factor that is part of a
target a fund manager has set for a fund’s performance to match
or exceed, which includes anything used for performance fee
calculations.
• A comparator benchmark: an index or similar factor against which
a fund manager invites investors to compare a fund’s performance.
Following the reviews, we confirmed benchmarks for all our funds.
Most of the funds do not use constraint or target benchmarks.
This is because our funds are actively managed and can have
stock and sector weightings that differ significantly from indices
and many of the other funds in IA sectors, hence they are
not constrained by any benchmark and this reduces the
relevance of targeting outperformance against such
benchmarks. The exceptions are mainly for income
funds that aim to produce a yield higher than a stated
index and therefore have a target benchmark.
It is instructive, however, for investors to be able
to compare performance of our funds against a
market and their peers. Therefore, the majority
of our funds have benchmarks that fall within the
comparator category.
16 - Liontrust Assessment of Value Report