Liontrust assets powered ahead in Q4 2019 with the acquisition of Neptune adding £2.7bn and strong net sales while outflows at rival asset manager Polar Capital resulted in falling AUM over the same period.
Liontrust Asset Management AUM jumped to £19.1bn for the period ended 31 December 2019 from £14.6bn at the start of the quarter.
The asset manager enjoyed net inflows of £836m in Q4.
In contrast, investors pulled net £623m from Polar Capital over the quarter with the North American Fund alone suffering net redemptions of £611m, including one large client switching away from the asset class in favour of alternatives. Combined with market and performance movements of £542m the fund house’s AUM shrank from £14.3bn to £14.2bn.
Tilney managing director Jason Hollands pointed to the Liontrust product set being more core in nature than the niche funds offered by Polar Capital as a factor behind their differing fortunes over the quarter.
“Polar’s capabilities are more specialist in profile, for example, tech, health, global insurance, convertibles, and they also manage more long-short strategies, so are going to be targeted at a slightly different client bank,” Hollands said.
North American strategy hits Polar
Polar Capital chief executive Gavin Rochussen (pictured) described Q4 2019 as “another challenging quarter”.
“The election result and reduced Brexit uncertainty increased demand for our UK Value Fund which had net inflows of £100m in December. On the other hand, clients continued to reduce their exposure to North American equities.”
The majority of funds experienced net inflows over the nine-months to 31 December 2019, but this was not enough to stop net outflows over the period of £1.1bn, Rochussen said. The North American strategy shed £795m over the period and the Japan fund faced £453m worth of redemptions before its merger with the Japan Value fund.
Additionally, a single client pulled £500m from the Polar Technology and Healthcare funds.
Performance fee profits shrunk 63% in the nine-month reporting period. The charging structure, which is set to face scrutiny under Financial Conduct Authority value for money assessments due this year, generated £8.8m for the period ending 31 December 2019 compared to £23.6m for the equivalent period in 2018.
Liontrust sees institutional opportunity in sustainable range
In contrast, Liontrust chief executive John Ions pointed out net inflows of £2.2bn over the nine-month period to 31 December 2019 was almost double that experienced during the same period in 2018.
Ions said: “The addition of the Global Equity team from Neptune has been well received and we have started marketing the managers and their range of funds. The diversification they provide across global equities and emerging markets is offering opportunities to expand our client base.”
While large clients had been detrimental to Polar’s fortunes in its latest update, Liontrust saw opportunities to increase business with institutional and non-UK investors via its sustainable investment team, which now manages over £5bn in fixed income and equities.
It currently only manages £1.3bn for institutional clients compared to £15.8bn for retail.
The update clarified that four teams now manage at least £1bn. The Economic Advantage team, which is headed by Anthony Cross and has previously been highlighted for the concentration risk it represents to the business, manages £7.7bn accounting for 40.6% of total AUM.
