Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 38
RESPONSIBLE CAPITALISM – INVESTING AND ENGAGEMENT
INVESTMENT PHILOSOPHY
At Liontrust, there is no house view or top-down approach to
managing funds. Fund managers have the freedom to manage their
portfolios according to their own investment processes and market
views. At the end of 2022, Liontrust had eight investment teams, all
with their own approach to investing.
Engagement
Purpose
Many of Liontrust’s investment teams undertake engagement with
companies (or with managers in the case of the Multi-Asset team)
in part to:
• Understand the financial, operational, and or governance related
situation(s) of their investments
Within this context, Liontrust approaches Responsible Capitalism by
focusing on what matters most when making investment decisions.
For each team, this will be slightly different, but all teams believe
in the effectiveness and ability of their investment process to make
a financial return for investors. Within this context, some teams
aim to understand the risks and opportunities that their holdings
face – including those that are ESG related -- and engage on these
matters. Teams vote their proxies, as appropriate.
• To follow up, express concern, and/or provide feedback to
companies on specific issues and/or on their management steps
or approaches
Below are Liontrust’s beliefs with regard to how its investment teams
approach investing. The subsequent pages outline each team’s
investment beliefs, investment process and ESG components.
Investment processes are central to investment teams’ processes
As an asset manager, Liontrust acts as a guardian of investors’
assets, helping them to achieve their financial goals. Managing
these assets are Liontrust’s investment teams. Each investment team
has a robust, repeatable investment process, distinct from the other
Liontrust teams’ approaches, and each aims to meet the objectives
of the funds it manages.
In terms of the investment process, Liontrust believes that:
• Investment processes are key to long-term performance and
effective risk control.
• Staying true to their documented investment processes helps to
create an in-built risk control for our fund managers, especially
in more challenging environments, by preventing them from
investing in companies and funds for the wrong reasons.
• Documenting an investment process means investors in our funds
and portfolios know exactly how each team manages their
money.
INVESTMENT PROCESSESS GUIDE STEWARDSHIP
Liontrust’s investment processes guide the teams’ stewardship and
decision making. Where possible, the investment teams vote their
proxies (see pgs. 93-100 for more information); many teams also
engage their holdings on material issues (each investment team’s
section for engagement examples). Proxy voting decisions and
engagements are led by each team’s investment process. In 2022,
Liontrust’s funds followed their investment processes and the Group
reported on their stewardship activities.
38 - Responsible Capitalism Report 2022
• To encourage holdings to take specific (or general) steps to
manage issues, events, and/or exposures better
• Ultimately, to maintain and/or improve the (longer-term) value of
the holding
Prioritising engagement topics with holdings
Each team’s investment process determines the topics of engagement
with holdings. These processes also determine how frequently
engagement is undertaken with a company.
Liontrust’s Sustainable Investment team may also prioritise
engagements based on input from its Advisory Committee.
Engagement on climate change/GHG emissions
Many of Liontrust’s investment teams have committed AuMA to the
Group’s net zero commitment. As part of this commitment, Liontrust’s
participating investment teams (with help from the Responsible
Capitalism team, as needed) prioritise engagement with the highest
emitters in the funds they manage. This engagement may focus
on what a holding’s approach is to net zero and what the interim
targets are for achieving net zero by 2050, if any. This fits into
the engagement that the investment teams (and/or the Responsible
Capitalism team on the investment teams’ behalf) undertake as
part of the normal day-to-day management of the funds. (For more
information on climate-related engagements, see pages 40–91.)
Frequency and format of engagement
The timings and frequency of engagement with holdings are
determined by the investment teams’ investment processes and the
materiality and/or urgency of the issues, including those issues
focusing on carbon emissions, where applicable or appropriate.
Investment teams may meet with their holdings regularly, helping to
keep funds managers informed of exposures or issues their holdings
may face. Engagements may take many forms, including face-toface (or virtual) meetings, email exchanges, or letters.
Reporting on engagements
Liontrust publishes information on an annual basis on the
engagements that many of its investment teams undertake. In some
instances, this reporting also covers the extent to which, if at all,
these engagements impact the teams’ investment decisions.