Liontrust Assessment of Value Report - Flipbook - Page 36
Liontrust Monthly Income Bond Fund
The aim of the Fund is to produce monthly income payments together
with capital growth by investing at least 80% of the portfolio in
investment grade corporate bonds that are sterling denominated
or hedged back to sterling. The Fund targets a net total return of at
least the IBOXX GBP Corporates (5-15Y) Index over the long term
(rolling 5-year periods). While the Fund has been structurally short
duration since launch, it has the flexibility to revert to a standard
duration fund as and when yields normalise.
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.
We have concluded that the Fund has broadly met expectations of providing a monthly
income with capital growth and outperforming the sector, although we note that the Fund is
slightly behind the benchmark’s performance over five years. The Fund has been positioned to
benefit from the expected normalisation of interest rates over the period and has suffered as
this has not developed. Superior credit/stock selection and sector allocation has compensated
to some extent for the negative interest rate contribution, but not enough to outperform the
benchmark. The interest rate positioning has been communicated to investors over the period,
so the overall performance should be in line with investors’ expectations. The Fund has met its
sustainability objectives.
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 costs of
services provided to the Fund are being appropriately managed. The annual review of the
fixed Administration Fee for this Fund completed as part of our normal governance processes
has led to the reduction in its Administration Fee of 0.02%. Research costs have been
absorbed by Liontrust and are not charged to the Fund. We will continue to review the costs
and charges of the Fund at least annually.
Comparable market rates
We have assessed the charges of this fund against comparable funds in the market. The OCF
of the highest charging share class of this Fund is higher than those of some comparable funds
and we have therefore undertaken a detailed evaluation. As a result of our annual review of
fund charges, the Administration Fees of the Fund were recently reduced.
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 share class they
are currently invested in. We will continue to monitor the charges of our classes to ensure they
meet the needs of our investors.
36 - Liontrust Assessment of Value Report
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 comparable
market rates, we have
concluded that the Fund
has performed in line with
or exceeded expectations,
delivering overall value to
investors including through its
investment performance.