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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 £901m
Yield 0.8%
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 0.83%

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) 389.40p
Accum units 389.40p
Fund commentary 10/02/21
Fund data updated on 21/09/21

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: 31/07/2020
5.7302%Kingspan Group
4.9883%London Stock Exchange Group
4.6422%Hargreaves Lansdown Plc
4.5491%Softcat Plc
4.3406%Smurfit Kappa Group Plc
3.9638%Aj Bell Plc
3.9626%Helios Towers Plc
3.9095%Legal & General Group
3.8502%Prudential Plc
3.7303%Learning Technologies Group Plc
Source: Trustnet

Sector breakdown

Financials 29%
Information Technology 19%
Industrials 17%
Consumer Discretionary 15%
Utilities 9%
Materials 7%
Communications 4%
Real Estate 2%
Money Market 0%

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
16/17 17/18 18/19 19/20 20/21   3 years 5 years Career 3 years 5 years Career
0.39%   0.43%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Martyn Jones/ Peter Michaelis

Manager. Michaelis is the lead manager of the Liontrust UK Ethical and Liontrust SF UK Growth funds, and co-manager of the Liontrust SF European Growth fund. He joined the investment industry in 1999 and Aviva Investors in 2000 as a fund manager on the sustainable and responsible investment team. He joined Alliance Trust in 2012 before the team were acquired by Liontrust in 2016. Michaelis holds a MA in physics from Oxford University, an MSc (Distinction) in energy and environmental engineering and a PhD in environmental economics from the University of Surrey. He also holds the CFA Society of the UK, Investment Management Certificate (IMC). Jones is co-manager of the Liontrust Sustainable Future European Growth Fund and Liontrust Sustainable Future Pan-European Growth Fund. He joined Liontrust in 2017 following the acquisition of Alliance Trust Investments and became a Portfolio Manager in November 2019. Prior to Liontrust, Jones spent five years at Alliance Trust Investments initially as a Graduate Trainee, and then as an Analyst with the Sustainable Investment team. He has an MA (Hons) in Management from the University of Glasgow and a Masters in Sustainability Leadership at the University of Cambridge. Jones has completed the IMC and is a CFA Charterholder.

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 (1 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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