Liontrust has come out on top from a round of new rating upgrades from Square Mile’s responsible investing subsidiary 3D Investing.
Funds are awarded certifications based on how much they adhere to 3D Investing’s governing philosophy of ‘doing good’, ‘avoiding harm’ and ‘leading change’.
The £852m Liontrust Sustainable Future Corporate Bond fund was one of three Liontrust-managed funds that were awarded these new 3D Fund Certifications, the most-basic award, which verifies that the fund meets a set of minimum standards in line with 3D Investing’s philosophy.
Full list of newly certified and rated funds
Source: FE Analytics
The FE fundinfo four-crown rated strategy is run by Stuart Steven, Kenny Watson and Aitken Ross – who focus on investment grade corporate bonds.
3D Investing praised the fund’s combination of both traditional credit analysis and “detailed sustainability assessment” which considers key environmental, social and governance (ESG) risks and uses a “rigorous exclusion screen”.
The £1bn Liontrust Sustainable Future Cautious Managed and the £1.1bn Liontrust Sustainable Future Defensive Managed funds were the other two Liontrust mandates that were awarded a 3D Fund Certification.
3D Investing said both portfolios were an “all-in-one solution for the sustainable investor” within the IA Mixed Investment 40%-85% and 20%-60% Shares sectors respectively.
The FE fundinfo five-crown rated strategies are both run by Peter Michaelis and Simon Clements. The Cautious Managed fund also has Chris Foster as a named manager.
One strategy not managed by Liontrust was also newly certified by 3D investing: the $482m (£350.8m) GS Emerging Markets Equity ESG fund.
The team at 3D investing praised the fund’s “comprehensive exclusions screen” that prevents exposure to any activities that “pose significant risk” to society and/or the environment.
Performance of GS Emerging Markets Equity ESG since inception
Source: FE Analytics
The emerging markets strategy invests in companies that Goldman Sachs managers Basak Yavuz and Hiren Dasani consider have “best-in-class” ESG credentials or are improving their ESG profile.
The research team at 3D investing said: “The fund’s focus is on reducing the exposure to the harmful impacts of products, services and operational practices, rather than investing in solutions to social and environmental challenges.
“This translates into it having a significantly less harmful impact than its 3D benchmark.”
Outside of the basic certification, 3D Investing also has an “Impact” rating, which is a step beyond the certification and has more stringent criteria for a fund’s underlying holdings.
The £553m Liontrust Sustainable Future European Growth fund, the £2.9bn Liontrust Sustainable Future Managed fund, the £1.1bn Liontrust Sustainable Future UK Growth fund and the £927m Liontrust UK Ethical fund were all awarded an ‘A’ Impact rating by 3D Investing.
These ratings are an “expression of confidence” in the social and environmental impact of the fund, ranging from A – the lowest – to AAA – the highest.
The 3D Investing research team pointed to the Liontrust sustainable team’s process - which is based on a common framework “founded on key structural growth themes, embracing improvements in quality of life, improvements in resource efficiency and the building of a stable and prosperous economy”.
“Although many of these themes have clear sustainability benefits, others are less tangible, especially in the prosperous economy theme,” it explained. “Nevertheless, the sustainability themes are evident, with a low exposure to ethical controversies.”
Michaelis and Clements manage the Liontrust Sustainable Managed fund, whilst the European and UK strategies are run by Michaelis and Martyn Jones.
3D Investing awarded its higher ‘to the £950m Liontrust Sustainable Future Managed Growth fund and £1.8bn Liontrust Sustainable Future Global Growth fund.
The research team praised the Liontrust Future Managed Growth fund’s flexible, tactical asset allocation policy, which allows it to invest in bonds as well as equities and cash. It is in the IA Flexible Investment sector.
Fundcalibre’s research team agreed. They said it had “proven its ability to outperform in the last two decades”, and that it is backed by “one of the most experienced and well-resourced teams around”.
The Fundcalibre researchers added that that the Liontrust Sustainable Future Global Growth fund was also a strong option for investors.
“It has produced excellent returns in the past two decades by sticking to its rigorous approach to sustainability and the strength of company management,” they said. Both funds are run by Michaelis, Clements and Foster.
Performance of Liontrust Sustainable Future Growth over 5yrs
Source: FE Analytics
All of the Liontrust funds that were newly rated rank in the top-quartile for performance over three years, with the exception of the Liontrust Sustainable Future Corporate Bond fund which ranked second quartile.
The Luxembourg-domiciled SICAV GS Emerging Markets Equity ESG fund ranked second quartile against its peers in the FO Equity – Emerging Markets sector over one year.