“We have £300m split across the European Income and European Enhanced Income funds. It is a nice sum to be managing, but £500m would be nicer,” said Russ.
“Nearly all my investors came over with me to Liontrust. As we grow assets I intend to build a team. If there is appetite, we may look at a pan-European income fund which includes the UK. That would likely be an offshore Dublin-based vehicle.”
Russ joined Liontrust in July from Argonaut, the firm he formed alongside fellow ex- Neptune manager Barry Norris in 2005.
Russ said the move to Liontrust was not the result of any personal issue between him and long-time colleague Norris but due to the emergence of a mutually beneficial opportunity.
“Liontrust wanted to buy in some assets and it seemed like a better fit for the income funds I manage. AUM had been pretty static at Argonaut on the income side for some time, and the company wanted to focus on absolute return and alpha products using a separate process. “It is a better home for an income suite as there are much deeper resources in terms of sales and marketing. The specific opportunity Liontrust presented prompted the decision. These sort of deals do not come around often.”
“Barry has his own investment process based on earnings upgrades, which is not how I run income funds,” Russ continued. “There wasn’t a commonality of process there, which made things difficult for the sales team” he said. Russ added: “I could see the potential benefits of being at Liontrust straightaway. There is an opportunity at this company to hit new markets, which I am very excited about.”
Russ thinks there is work to be done in communicating the merits of European income funds relative to their UK counterparts, and this could be key to the AUM growth he seeks.
“Many people are familiar with UK equity income funds and they have done well for investors for decades. There is absolutely no reason why you can’t do the same thing with continental Europe and it may even be a little easier than in the UK right now. He concluded: “Many European companies have lots of free cashflow and there is a very good culture among management of returning cash to shareholders. There is a strong diversification story for us to tell UK investors.”