Liontrust has revealed its total assets have shrunk by £500m in the month and half since its interim reporting period, as it confirms its chairman of nearly a decade will be stepping down.
Although the fund group’s assets under management (AUM) rose by 15% from £10.5bn to £12.0bn between 1 April and 30 September 2018 by mid-November, after the reporting period, AUM had fallen back to £11.5bn.
Liontrust joins the rank of asset managers that have seen their assets contract during an especially volatile period for markets in October.
Chief executive John Ions (pictured) said that increased volatility “is usually a positive for us”.
“Investors become more discerning and look for fund managers who have a robust process, a good track record of being able to handle such an environment and of superior stock selection,” he said. “With the gradual withdrawal of central bank support, for example, active management and having the ability to be flexible will become increasingly important when investing in bond markets.”
Sustainable funds drive growth
Ions downplayed the post-interim shrinkage of assets, pinning future growth at the firm on the growing demand for sustainable products.
During its interim period Liontrust fared better than some of the larger players like Jupiter, raking in net flows of £723m. This was up 306% from the £178m in net flows it brought in over the same period in 2017.
Positive flows continued to be driven by its sustainable investment arm, inherited through the Alliance Trust Investment acquisition.
Investors have poured £900m into its sustainable funds since they were purchased by Liontrust in April 2017. It is now the second biggest strategy at the fund group, accounting for roughly 30%, or £3.4bn, of total assets.
Ions said an increasing number of institutions and investors now regard sustainable as a proven investment style and noted that more people care about the ethical impact of their investments.
“We are confident the AUM will continue to increase given the experience and long track record of our sustainable investment team, their extensive knowledge and expertise and the integration of ESG with their investment decisions,” he said.
Its nascent fixed income group has also remained a key source of net inflows.
Last year Liontrust poached fixed income heavyweights Phil Milburn and David Roberts from Kames. Together with manager Donald Phillips, who joined from Baillie Gifford in January, the team now run £272m across the Strategic Bond, High Yield Bond and Absolute Return Bond strategies at Liontrust.
Adrian Collins retires
Its interim report comes alongside an announcement that non-executive chairman Adrian Collins will retire next year.
Collins, who has been in the role nine years, will officially step down at the company’s AGM in 2019 at which point he will be replaced by Alastair Barbour. Barbour is currently an independent non-executive director and chairman of Liontrust’s audit committee.
Chief executive Ions said in a statement: “I want to thank Adrian Collins for his outstanding contribution to the board and company over a period of time that has seen significant change for our business. I would also personally like to express my thanks for the support and advice Adrian has given me since becoming chief executive, this has been invaluable.
“I’m delighted that Alastair Barbour will succeed Adrian as non-executive chairman. He has considerable experience of both asset management and finance, which will be key as we continue to invest in and grow the business.”
Profits double
Elsewhere the Aim-listed manager said it boosted profit before tax by 149% to £7.8m, despite incurring costs of £6.7m over the first half of the year. Adjusted profits were up 21% at £14.5m.
Off the back of these results it decided to raise its first interim dividend from 5p in 2017 to 7p in 2018.
Year to date shares in the group are up 27% at 624p.
