Liontrust plans to launch its first closed-ended fund through the £150m initial public offering of an environmental, social, and governance strategy.
The Liontrust ESG Trust will be run by Peter Michaelis, Simon Clements and Chris Foster, who are part of Liontrust’s 13-strong sustainable investment team. This team has a 20-year track record of managing sustainable funds and has achieved a strong track record through open-ended funds like Liontrust Sustainable Future Global Growth.
Liontrust ESG Trust will be built around a concentrated portfolio of between 25 and 35 sustainable companies exposed to three key structural growth trends - better resource efficiency, greater safety and resilience and improved health - and 21 underlying themes within these that will shape the sustainable economy of the future.
The closed-ended structure means the trust can be built with less consideration of shorter-term volatility than in open-ended funds, allowing the team to hold small-cap stocks that are not held by the open-ended funds they manage.
Portfolio holdings will be companies with the highest sustainability scores, as determined by the Liontrust sustainable investment team's established investment process.
The team defines ‘sustainable companies’ as firms that will capitalise on and help drive the key structural growth trends that will shape the sustainable global economy of the future; will provide or produce sustainable products and services; and have a progressive approach to the management of environmental, social and governance issues
Michaelis said: “We are excited by the opportunities that Liontrust ESG Trust offers in being able to construct a high conviction portfolio with companies from across the market cap spectrum and our sustainable investment themes.
“Key attractions include the wide opportunity set it provides as it is unconstrained by market capitalisation, a concentrated portfolio focused on the highest sustainability companies and the chance to invest a portion of the portfolio in small-cap companies that we do not hold in our open-ended funds. These stocks fit perfectly with our focus on the long-term drivers of the sustainable economy of the future.”
In addition, up to 10 per cent of the management fee Liontrust receives from the trust will be used to fund research to identify and develop financial instruments covering those UN Sustainable Development Goals (SDGs) that are currently uninvestable.
Liontrust ESG Trust will be chaired by Richard Laing, a former chief executive and finance director roles at CDC Group (formerly Commonwealth Development Corporation), giving him a strong background in sustainability and responsible investing.
John Ions, chief executive of Liontrust, added: “This is a significant launch for Liontrust in expanding our offering into investment trusts.
“The intention to launch Liontrust ESG Trust recognises the growing demand for sustainable investment as an increasing number of people want their investments to make positive contributions to society, the environment and the economy.
“Liontrust ESG Trust will enable a wider range of investors to access Liontrust’s Sustainable Investment team and its proven process. Over the past two decades, the Sustainable Investment team has demonstrated the ability of its investment process to outperform mainstream benchmarks and the impact of its funds on sustainable development.”