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LIONTRUST UK ETHICAL 2

LIONTRUST UK ETHICAL 2 - Overview

Overview of LIONTRUST UK ETHICAL 2

The fund aims for long-term capital growth via a multi-cap portfolio of UK companies, which must have both strong growth prospects and meet Liontrust’s environmental and social criteria. The managers uses both positive and negative screening to analyse companies and seeks to profit from three major themes of sustainable investment: resource efficiency, healthier & higher quality of life and safety & more resilient. The ethical exclusions include alcohol, animal testing, fossil fuels, gambling, nuclear, pornography, tobacco and weapons.

  • Standard Initial Charge 0.00%
  • Initial charge via Bestinvest 0.00%

Fund summary

Sector UK All Companies
Structure OEIC
Launched November, 2012
Size £880m
Yield 1.0%
Charging basis Income
Dividends paid Acc units only

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.70%
Ongoing charges figure 0.82%

Risks

Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Investor Information Document, which we make available to you before you make a decision to invest, alternatively it is available on request.

Bestinvest view

Managers Peter Michaelis and Martyn Jones specialise in sustainable investing, having managed a number of funds in the space at Aviva and then Alliance Trust prior to its merger with Liontrust. They aim to outperform the mainstream benchmark and peer group, but the bias to growth and to small and mid-caps means performance can diverge from the market. They have a solid track record which demonstrates some defensive characteristics, frequently outperforming the benchmark in down markets. Their key mantra is "Investing for tomorrow, today" so they look for companies that are early adaptors or innovators in their respective sectors. They benefit from a 13-strong sustainable investing team at Liontrust, as well as a 5-strong advisory committee.

Portfolio

Allocation Proportion(%)
Equity 97
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash 3
Allocation Proportion(%)
UK 95
Europe 3
North America 1
Japan 0
Pacific 0
Emerging Markets 1
Allocation Proportion(%)
Large Caps 26
Mid Caps 33
Small Caps 41

View all performance data for this fund

Investment process

The investment process has three stages: 1) The universe is 2000 stocks, which is screened on sustainability and “quality”. The Liontrust team has its own sustainability matrix, which assigns a rating to each company based on its product sustainability (A-E, E being worst) and management (1-5, 5 being worst). They use MSCI data plus internal analysis. An A rating indicates a company whose products or services contribute to sustainable development e.g. renewable energy. An E rating would be tobacco stocks. The management axis is a qualitative measure of policies and practices in place for managing ESG risks and of general management quality. Companies must score C3 or higher to be considered for portfolio inclusion. 2) The managers then select 100-150 stocks based on predicted future financial returns and valuation upside. The primary metrics they use are return on equity, free cash flow and sales growth. They are looking on a 3-5 year time horizon, but use historic multiples to derive a 3-year future predicted stock value. The managers then add stocks they believe have >30% upside potential or have an attractive ROE relative to peers. 3) Portfolio construction. The managers select the 40-60 stock combination that best diversifies risk across sectors and uncorrelated growth themes and reduces volatility of returns relative to the benchmark. They monitor active risks via Style Research. The portfolio is reviewed by an independent advisory committee, which meets at least three times a year to monitor the social and environmental impact of the portfolio.

Live feed

Bid price(inc) 361.16p
Accum units 373.71p
Fund commentary 10/02/21
Fund data updated on 09/12/21

Asset allocation

Allocation Proportion(%)
Equity 97
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash 3

Equity Geographic

Allocation Proportion(%)
UK 95
Europe 3
North America 1
Japan 0
Pacific 0
Emerging Markets 1

Equity Capitalisation

Allocation Propor
tion(%)
Large Caps 26
Mid Caps 33
Small Caps 41

Top 10 holdings

As at: 29/10/2021
5.0879%Legal & General Group
4.3536%Paragon Banking Group Plc
4.2672%Smurfit Kappa Group Plc
4.1279%Prudential Plc
3.8657%Countryside Properties Plc
3.7512%Softcat Plc
3.4099%London Stock Exchange Group Plc
3.3028%Hargreaves Lansdown Plc
3.2386%Halma
3.1662%Oxford Instruments
Source: Trustnet

Sector breakdown

Financials 28%
Information Technology 17%
Consumer Discretionary 16%
Industrials 14%
Materials 8%
Utilities 7%
Communications 5%
Real Estate 3%
Health Care 1%
Money Market 1%

Portfolio details

40-60 stocks. 3-year typical holding period. 80-90% active share. 3-7% tracking error.

Constraints

Fossil fuel and tobacco free.
There are some limits placed on the portfolio but these could result in significant divergences from the benchmark from time to time.

Average monthly relative returns Bestinvest MRI
17/18 18/19 19/20 20/21 21/22   3 years 5 years Career 3 years 5 years Career
0.07%   0.32%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Martyn Jones / Peter Michaelis

Manager. Jones is the Lead Fund Manager of the Liontrust Sustainable Future European Growth Fund and Pan-European Growth Fund and co-manager of SF UK Growth and Ethical Funds. He joined Liontrust in 2017 following the acquisition of Alliance Trust Investments and became a fund manager in 2019. Prior to Liontrust Jones spent five years at Alliance Trust Investments initially as a Graduate Trainee and then as an Investment Analyst with the Sustainable Investment Team. Michaelis joined Liontrust in April 2017 as part of the acquisition of Alliance Trust Investments, where he was Head of Investment. He has been managing money in Sustainable and Responsible Investment for over 20 years. JHe started his career working for the Steel Construction Institute as an Environmental Engineer. He then moved to Henderson Global Investors where he was able to use his experience as a Sustainable & Responsible Investment Analyst and Assistant Portfolio Manager. In 2001, he moved to Aviva Investors where he was promoted to lead portfolio manager on a number of its Sustainable and Responsible Investment funds, before being made Head of Sustainable and Responsible Investment.

Track record

The track record of Martyn Jones / Peter Michaelis in managing mutual funds in this sector is still too short for us to draw any meaningful conclusions and so our assessment is based largely on qualitative aspects.

Periods of worst performance
Absolute -5% (September 2020 - October 2020)
Relative -5% (February 2021 - May 2021)

Other funds managed

Sector record since May 2020 (2 yr)




About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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