Liontrust Assessment of Value Report - Flipbook - Page 8
How we carried out the assessment
of value
What methodology have we used to evaluate the seven criteria for each fund?
1. Quality of Service
A number of services are required to manage and administer funds.
We have assessed the range and quality of those activities which
directly impact the experience of our investors. A wide range of
services has been evaluated, including those that are provided by
Liontrust directly and those provided by third parties on our behalf.
These include:
• Investment services: Our investment processes and approach to
asset stewardship are critical to the delivery of our investment
management activities.
• Fund services: These are operational activities that are core
to the smooth running of our funds and include, for example,
determining the daily price of the share classes of a fund
and ensuring that investors receive their interest and dividend
payments in a timely manner.
• Engagement and Communications: Here we have considered the
quality of our investor servicing including, for example, how we
address investor queries and resolve complaints, as well as the
quality, breadth and accessibility of the information we provide.
• Governance: It is important to ensure that funds are managed
and operated in the best interests of investors. We have therefore
considered whether an appropriate and effective control
environment is in place.
We evaluate the services provided against the high standards we
have set for both ourselves and our third-party service providers
and importantly incorporate the feedback we receive from our
investors (see pages 14 and 15 about our Investor Survey).
2. Performance
We have assessed the investment performance of each fund against
both its stated investment objective and against the benchmarks set
out in the funds’ Prospectus. Performance has been considered on a
net of costs basis, i.e. after ongoing charges have been deducted,
at a share class level, for every fund.
Our comprehensive evaluation has considered whether each 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. All our funds aim to achieve their
performance objective over a five-year period, and therefore our
assessment considers the funds’ performance over this timescale.
Performance assessments have also been conducted over additional
time periods, both longer and shorter than five years for example,
when a fund has not delivered its objective or a sufficient level of
performance. For funds that seek to deliver income, we also review
whether the income objective has been achieved.
8 - Liontrust Assessment of Value Report
3. Costs of the Authorised Fund Manager
Our assessment considers whether we review the costs and charges
of our funds to ensure that the charges within the Ongoing Charges
Figure (OCF) remain reasonable. We do this by regularly reviewing
each fund’s:
• Annual Management Charge (AMC) through our ‘Pricing Review’.
This covers the charge for the selection and management of the
investments held by the funds and the running of the business to
manage our funds.
• Administration Fee through our ‘Administration Fee Review’.
The Administration Fee reflects the fixed charge that funds pay
to Liontrust in relation to the various operating expenses that
have been incurred; it is reviewed every year and adjusted as
required to ensure it remains appropriate.
Keeping our costs constantly under review means we can renegotiate
with external suppliers, increasing value for money for our investors
where possible.
Our assessment considers whether we are able to ensure we can
function during more challenging environments, and continue to reinvest
into our business to enhance our range of products and services for
investors. We also consider the appropriateness of explicit transaction
costs, such as the commissions we pay to our chosen brokers.
4. Comparable Market Rates
We have evaluated the charges for each share class of each of our
funds by comparing these to a comparable peer universe. We have
assessed the levels of our:
• AMC;
• Administration Fee; and
• OCF
relative to the comparable share class in the Investment Association’s
(IA) ‘sector’ group of similar funds. For certain IA sectors, the peer
group may need to be further refined to increase the accuracy and
meaningfulness of comparisons.
Different share classes within a fund can have different outcomes in
terms of how they might fare relative to comparable share classes.
Our fund-level conclusions are driven by the outcome of the highest
charging share class within each fund.