getting investment returns from a cleaner, healthier, and ... scottish... · 1/1/2019 · source:...

Getting investment returns from a cleaner, healthier, and safer world

Mike Appleby – Sustainable Investment Manager

For professional investors and advisers only

Increased awareness

1

Huge interest

All use of company logos, images or trademarks in this presentation are for reference purposes only

Trends | Cleaner

2

Annual mean hours per site when PM10 pollution was moderate or higher, for urban background sites, 1992 to 2018

Source: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/796887/Air_Quality_Statistics_in_the_UK_1987_to_2018.pdf

4 Moderate5 Moderate6 Moderate7 High8 High9 High10 Very High

0

200

400

600

800

1,000

1,200

1,400

1,600

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Mea

n pe

r site

: Hou

rs o

f mod

erat

e or

hig

her P

M10

pollu

tion

Air pollution

Trends | Healthier

3

Source: www.gapminder.org, August 2019

Child mortality (0-5 year olds dying per 1,000 born)

0

100

200

300

400

500

600

1800 1818 1836 1854 1872 1890 1908 1926 1944 1962 1980 1998 2016

China United Kingdom United States

Child mortality

Trends | Safer

4

Source: Department for Transport; https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7615

Number of deaths caused by reported road accidents in Great Britain

0

2,000

4,000

6,000

8,000

10,000

1926 1936 1946 1956 1966 1976 1986 1996 2006 2016

Road accident deaths

improvement per km

30x

Slowly at first and then very quickly

5

Easter Parades in New York City

1900

Slowly at first and then very quickly

6

13 years

Easter Parades in New York City

1900 1913

Our offering

Sustainable Investment Team philosophy

8

Sustainable companies have better growth and are more resilient than the market gives them credit for

We use this underappreciated advantage to deliver outperformance in equity, bond and multi asset portfolios

By supporting these sustainable companies we can accelerate environmental and social improvements

Thematic analysis

9

Greater safety and resilience

• Increasing financial resilience

• Saving for the future

• Insuring a sustainable economy

• Leading ESG management

• Improving auto safety

• Enhancing digital security

• Better monitoring of supply chains and quality control

• Providing affordable healthcare

• Connecting people

• Delivering healthier foods

• Building better cities

• Providing education

• Enabling innovation in healthcare

• Enabling healthier lifestyles

Improved health

• Improving the efficiency of energy use

• Improving the management of water

• Increasing electricity generation from renewable sources

• Improving industrial andagricultural processes

• Increasing waste treatmentand recycling

• Making transportation more efficient

Better resource efficiency

20 areas of predictable and resilient growth

Four aspects of sustainable investments

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Theme

ESGmanagement

quality

Businessfundamentals

Valuation

Sustainable investment: finding better returns

Sustainable investment trends: Providing affordable healthcare

Theme | Providing affordable healthcare

12

Source: a) OECD Health Data 2013. PPP = Purchasing Power Parity ; b) Centres for Medicare and Medicaid Services Office of the Actuary. National Health Expenditure Projections 2018-27.Numbers subject to rounding; c) Evaluate Pharma; IMS Health; PJB Publications (Pharmaprojects); US Food and Drug Administration, Centre for Drug Evaluation and Research; McKinsey analysis]

Healthcare spending

Very high

of GDP in US

18%of GDP in UK

9%

Growing

pa for next decade

6%

Productivity

Innovation required

Theme | Providing affordable healthcare

13

Drug trials

Drug trials are complex

14

All use of company logos, images or trademarks in this presentation are for reference purposes only

Data on prescriptions

Software to design, plan and monitor drug trials

Run more effective drug trials

Navigating the climate crisis

16

Source: Liontrust, January 2020. All use of company logos, images or trademarks in this presentation are for reference purposes only

Team milestones

Global events

3rd IPCC Report

!

Stern Review

£

Macondo oil spill

Dieselgate

CO2Footprint Natural Gas

24% energy efficiency

technology

ParisAgreement

Launch: Sustainable Funds

Coal Oil Autos 72% lessCO2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192000 2010 2020

Liontrust Sustainable Investment Team

Sustainable portfolio management team

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Peter MichaelisHead of Sustainable

Investment Team

Neil BrownInvestment Manager

Simon ClementsInvestment Manager

Stuart StevenHead of Fixed Income

Laurie DonInvestment Manager

Chris FosterInvestment Analyst

Martyn JonesInvestment Manager

Jack WillisAssistant Investment

Manager

Kenny WatsonInvestment Manager Aitken Ross

Investment ManagerHarriet Parker

Investment Manager

Mike ApplebyInvestment Manager

Hannah JonesPortfolio Manager Assistant

Source: Liontrust, as at November 2019. *Sinead works closely with the Sustainable Team but supports other Liontrust teams on governance & stewardship issues

Sinead Lennon*Governance & Stewardship

Manager*

Mingming HuangPortfolio Manager Assistant

Focused, well-resourced and experienced

Sustainable Investment | Funds

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Broad range of sustainable investment fundsSource: Liontrust

UK European Global

Global Growth

Absolute Growth

Managed

Defensive Managed

Cautious Managed

European Growth UK Growth

Ethical

Corporate Bond

Equity Fixed Income Managed

Strategy type:

Monthly Income Bond

European Corporate Bond

Sustainable Investment

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Experienced team with proven track recordSource: Financial Express, as at 31.12.19, total return (net of fees, income/interest reinvested), primary share class, in GBP. Quartiles correct as at 13.01.20, UK based SF Funds

Past performance is not a guide to future performance, investments can result in total loss of capital. Please refer to the Key Risks slide for more information

First quartile: 90%Third quartile: 10%

1 year

First quartile: 100%

3 years

First quartile: 100%

5 years

Important information

Discrete performance

22

Source: Data as at 31.12.19. Financial Express. Primary share class, total return (net of fees, interest/income reinvested) versus comparator benchmarks


To previous quarter 12 months ending (%) Dec-19 Dec-18 Dec-17 Dec-16 Dec-15

Liontrust Sustainable Future Global Growth 2 Acc 29.4 1.3 18.8 17.3 6.5

MSCI World 22.7 -3.0 11.8 28.2 4.9

IA Global 21.9 -5.7 14.0 23.3 2.8

Liontrust Sustainable Future UK Growth 2 Acc 30.2 -6.7 20.7 8.0 9.8

MSCI UK 16.4 -8.8 11.7 19.2 -2.2

IA UK All Companies 22.3 -11.2 14.0 10.8 4.9

Liontrust Sustainable Future Managed 2 Inc 24.7 -0.5 16.1 11.8 6.1

IA Mixed Investment 40-85% Shares 15.8 -6.1 10.0 12.9 2.7

Liontrust Sustainable Future Absolute Growth 2 Acc 26.4 1.1 18.1 15.0 5.4

IA Flexible Investment 15.7 -6.7 11.2 13.8 2.0

Liontrust Sustainable Future Defensive Managed 2 Inc 16.8 -2.2 11.9 9.3 3.7


Liontrust Sustainable Future Cautious Managed 2 Inc 19.5 -2.2 13.4 9.7 4.9


Liontrust Sustainable Future Corporate Bond 2 Inc 11.8 -3.6 7.2 10.5 0.5

iBoxx Sterling Corporate 11.0 -2.2 5.0 11.8 0.6

IA Sterling Corporate Bond 9.5 -2.2 5.1 9.1 -0.3

Discrete performance

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To previous quarter 12 months ending (%) Dec-19 Dec-18 Dec-17 Dec-16 Dec-15

Liontrust UK Ethical 2 Acc 37.8 -7.3 22.5 4.5 10.6

MSCI UK 16.4 -8.8 11.7 19.2 -2.2

IA UK All Companies 22.3 -11.2 14.0 10.8 4.9

Liontrust Sustainable Future European Growth 2 Acc 25.9 -14.8 19.8 16.0 12.4

MSCI Europe ex UK 20.0 -9.9 15.8 18.6 5.1

IA Europe Excluding UK 20.3 -12.2 17.3 16.4 9.3

Liontrust Monthly Income Bond B Gr Inc 9.4 -3.0 8.9 9.4 1.4

iBoxx Sterling Corporates 5-15 years 10.7 -1.7 5.7 10.8 1.2

IA Sterling Corporate Bond 9.5 -2.2 5.1 9.1 -0.3

iBoxx UK Sterling Corporate 1-5 Years 5.0 -0.2 2.6 5.4 1.5

Source: Data as at 31.12.19. Financial Express. Primary share class, total return (net of fees, interest/income reinvested) versus comparator benchmarks


Key risks

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Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital.

The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.

Some of the Funds managed by the Sustainable Future Equities team involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates.

Investment in Funds managed by the Sustainable Future Fixed Income team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The value of fixed income securities will fall if the issuer is unable to repay its debt or has its credit rating reduced. Generally, the higher the perceived credit risk of the issuer, the higher the rate of interest. The Monthly Income Bond Fund has a Distribution Yield which is higher than the Underlying Yield because the fund distributes coupon income and the fund’s expenses are charged to capital. This has the effect of increasing dividends while constraining the fund’s capital appreciation. The Distribution Yield and the Underlying Yield is the same for the SF Corporate Bond Fund.

GIPS – Sustainable Future – Managed

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Definition of GBP Composite

Sustainable Future security selections will be based on price and long term total return prospects of companies which meet defined ethical, social and environmental criteria and which will benefit from a shift towards a more sustainable economic system.

The process invests predominantly in a diversified portfolio of global bonds, equities and cash. Allocations to these will vary over time. The process seeks to invest in high-quality organisations with robust business fundamentals, strong management and attractive valuations; adaptors and innovators capitalising on change, accessing new markets and opportunities and outperforming their competitors; and companies that are creating real and lasting value for shareholders and society, now and in the future. Typically the portfolio will hold between 140 and 180 stocks aiming to provide long-term capital growth and income.

Composite: Sustainable Future – ManagedComposite Inception Date: 01 September 2012Reporting Currency: GBPReporting Date: 31 December 2018Benchmark: IA Mixed Investment 40-85% sector average

Returns 3 year Standard Deviation Portfolios Assets

Year Gross of fee return %

Benchmark return %

Composite 3-year std dev (%)

Benchmark 3-year std dev (%)

Year-end Number in Composite

Total Composite Assets (£m)

GIPS Total Firm Assets (£m)

Total Firm Advisory Assets

(£m)*Total Firm Assets

(£m)2012 ̂ 3.4 3.7 n/a n/a 1 336.0 2,530.0 0.0 2,530.02013 23.0 14.5 n/a n/a 1 412.9 3,466.9 103.2 3,570.12014 6.8 4.9 n/a n/a 1 454.2 4,139.8 165.6 4,305.42015 6.9 2.7 9.2 7.5 1 501.1 4,183.7 191.6 4,735.32016 12.6 12.9 9.1 7.1 1 581.9 5,755.8 244.7 6,000.52017 17.0 10.0 8.4 6.8 1 712.7 10,210.6 343.3 10,553.92018 0.4 -6.1 8.8 7.0 1 819.8 10,794.1 444.9 11,239.0

^ 4 Months from September 2012* Supplemental information and is the combination of the GIPS Total Firm & Advisory Assets.

Sustainable Future – Managed

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1. Liontrust Asset Management PLC (“Liontrust” or the “Firm”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with GIPS standards.

2. Liontrust has been independently verified for the periods 1st January 2000 to 31st December 2018 inclusive. The verification reports are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

3. For the purposes of GIPS, the Firm is defined as all funds under the management of Liontrust Asset Management PLC. 4. The “Firm” is known as Liontrust, and this encompasses the combined investment management activities of Liontrust Investment Partners LLP, Liontrust Fund Partners LLP and

Liontrust Investments Limited. Liontrust is a specialist fund management company launched in 1995 and listed on the London Stock Exchange in 1999. All Liontrust entities are authorised and regulated by the Financial Conduct Authority.

4. The Firm was redefined from Liontrust Investment Partners LLP to Liontrust Asset Management PLC on 1st January 2018 as this Firm definition is the broadest definition available that includes all assets contained in the Firm’s composites.

5. The Benchmark is the IA Mixed Investment 40-85% sector average.6. All performance returns have been calculated gross of investment management fees. Furthermore, no other fees have been deducted bar trading expenses.7. All performance returns and market values are denominated in Sterling.8. Throughout all time periods the number of portfolios contained within the composite was less than five, therefore no measurement of dispersion has been presented.9. A representative fee schedule for this composite is a yearly Management Fee ranging between 0.40% - 0.70%. Note that fees for institutional investors are assessed on a case-by-

case basis.10.For the purposes of GIPS the composite was created on the 1st September 2012, however the composite has been managed by the Team since 1st March 2001.11.Liontrust is generally permitted to use financial derivative instruments to more effectively manage the level of investment risk and to facilitate efficient investment and

management of cash and liquidity in each Fund. Liontrust may use futures, forwards (including forward rate agreements), options (both writing and purchasing), swaps (including credit default swaps) and contracts for difference, including both exchange traded and over the counter derivative instruments for any Fund. Additional information regarding investments in derivative instruments are available on request.

12.Liontrust acquired the relevant composite and performance track record as part of the acquisition of Alliance Trust Investments (“ATI”) on 1st April 2017. The composite claims GIPS compliance and was independently verified, by ISC Ltd, for the periods 1st January 2009 through 31st March 2017. The verification report is available on request.

13.As of 1st January 2019, the Sustainable Future – Managed Multi-Asset Composite has been renamed the Sustainable Future – Managed Composite.14.A complete list and description of all the Firm’s composites has been constructed and is available upon request.15.Additional information regarding policies for valuing portfolios, calculating performance and preparing compliant presentations are available on request.

Supplemental InformationNon-Compliant Composite Bulletin August 2012

Due to the unavailability of certain data prior to the acquisition, all period returns and composite valuations prior to the 1st September 2012 cannot form part of our GIPS compliant record. *The composite had been previously managed by Alliance Trust Investments since 1st March 2001.

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Sustainable Future – Managed

YearGross Composite

ReturnBenchmark

ReturnComposite Market Value

at Year End (£m)Number of Portfolios at Year

EndTotal Firm Assets (£m)

2001* -11.2%% -9.7% Not available 1 5,127

2002 -23.8% -18.1% Not available 1 4,676

2003 17.3% 18.1% Not available 1 5,549

2004 10.6% 9.5% Not available 1 5,024

2005 18.8% 19.9% Not available 1 3,374

2006 14.2% 9.9% Not available 1 1,183

2007 6.0% 4.3% Not available 1 1,292

2008 -19.2% -21.5% Not available 1 1,364

2009 17.6% 20.1% Not available 1 1,183

2010 11.0% 12.3% Not available 1 1,296

2011 -4.3% -5.5% Not available 1 1,364

2012 10.3% 6.1% Not available 1 2,530

Disclaimer

28

This presentation is issued by Liontrust Fund Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518165) to undertake regulated investment business.

It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy.

The document contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.

All the information provided should be treated as confidential, information may constitute material non-public information, the disclosure of which may be prohibited by law, and the legal responsibility for its use is borne solely by the recipient. If this presentation has been produced for a professional audience it should not be distributed to, or relied upon by, retail investors. It should not be copied, faxed, reproduced, divulged or distributed, in whole or in part, without the express written consent of Liontrust.

Always research your own investments and (if you are not a professional or a financial adviser) please consult suitability with a regulated financial adviser before investing.

Any decision to invest should be always based on the final Prospectus and Key Investor Information Documents (KIIDs). These documents contain important information which should be read before investing in any fund and they can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust.

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