Impact report: Liontrust annual reassessments

Melissa Gilmour
The Big Exchange
Published in
6 min readAug 12, 2021


by Liz Rees, Impact Analyst, The Big Exchange

The Liontrust funds offered on The Big Exchange have completed their annual reassessment and we are glad to report that they all retain the medals awarded last year. There are 9 funds to choose from, covering a range of strategies, all managed by the sustainable team at Liontrust. You can read more about their approach and what they offer to investors here.

Liontrust is a specialist fund provider which takes pride in its distinct culture. Their mission is to make a positive impact for investors, other stakeholders, and society. The Sustainable Investment team has employed the Sustainable Future (SF) process for over two decades, transferring to Liontrust in 2017, and now has 13 members.

Their approach combines negative and positive screening and identifying key structural growth trends that will shape the sustainable global economy of the future. They follow three mega trends- better resource efficiency, improved health, and greater safety and resilience- with 21 sub-themes within these.

The equity fund managers (who invest in company shares) seek businesses delivering transformative products or services, in areas such as technological and medical innovation. For the bond funds (which lend to companies), the managers combine traditional analysis with a detailed sustainability assessment, although this process is less focused on solutions.

Environmental, social and governance (ESG) analysis is incorporated into every decision and used to engage with companies to influence or change their behaviour. Initiatives include the ‘One and a Half Degree Transition Challenge’ which calls for all companies held within the SF funds to explain how they plan to decarbonise their businesses to limit global warming to 1.5 degrees.

Liontrust provide an annual review, including a mapping of holdings to the Sustainable Development Goals (SDGs) and the fund themes. An ‘impact and sustainability’ report provides detail on the carbon footprint of the funds although it does not yet cover impact outcomes. All funds score 3 out of 3 and 2 out of 3 for positive influence and impact evidence respectively.

As a result of our assessment, 8 of the funds are awarded a silver medal, and the Monthly Income Bond gets a bronze. We outline the key features of the different strategies below:

Bond funds

Liontrust Sustainable Future Corporate Bond Fund invests mainly in corporate bonds (loan arrangements) with the aim of providing income and some capital growth. You should expect most of your returns to come in the form of income, which is paid quarterly.

Liontrust Monthly Income Bond Fund also invests mainly in corporate bonds but with shorter maturities than its sister fund. It aims to deliver monthly a higher level of income by deducting some of the fees from capital rather than income. The focus on ESG incorporation, rather than impact, is why this fund gets a Bronze medal.

Bond investments tend to show less alignment with the SDGs than equities, but these funds do have around 7% of their portfolios aligned with the SDG 6 (clean water and sanitation). As is typical with bond funds, the portfolios have high exposure to banks and other financial services *.

A top 10 holding on both portfolios is a bond issued by Legal and General Group whose activities include investment management, pensions, and life assurance. The company has a mission to deliver ‘inclusive capitalism’ through active ownership of investments and responsible business practices. They recognise that new economic and social infrastructure is needed and have invested £26 billion directly into future cities, housing, and clean energy.

Equity funds

Liontrust Sustainable Future UK Growth Fund invests in companies listed on the UK stock market or with most of their activities in the UK. The managers seek growth opportunities across the market cap spectrum, so you gain exposure to mid and small cap companies as well as larger stocks. 10% of the portfolio is aligned to SDG 3 (Good Health and Wellbeing) *.

The fund invests in Smurfit Kappa, one of the leading paper-based packaging companies in the world, which has integrated production, recycling, and forestry operations. Its factories source most of their raw materials from the company’s own paper mills. In turn, sourcing of recovered fibre and wood for the mills is from a combination of reclamation, forestry operations and purchases from third parties.

Liontrust Sustainable Future European Growth Fund will give you access to a broad range of European businesses, with around 23% of the portfolio listed in Germany, 15% in Sweden and 10% in both Switzerland and France. The fund is notably aligned with SDG 3, Good Health and Wellbeing, at 12% of the portfolio*.

The fund holds nearly 4% of the portfolio in ASML which makes lithography machines, the core equipment in the manufacturing of semiconductors. By enabling greater production capacity, and reducing costs, it is widening access to transformative technologies, such as mobile telecoms, medical equipment, and electric vehicles.

Liontrust Sustainable Future Global Growth Fund offers exposure to structural growth trends that are shaping the global economy of the future. The managers seek well run companies whose products and operations benefit from these trends. US companies make up 58% of the portfolio with technology and healthcare the most significant sector weightings.

Among the largest holdings is Thermo Fisher Scientific, a supplier of scientific instruments and services to the healthcare, biotechnology, and pharmaceutical sectors. The company strives to minimize the impact on the environment by designing products that require less hazardous materials, allow shipping without Styrofoam coolers, and are readily recyclable.

Multi-asset funds

These funds offer a blend of bonds (loans) and equities (shares) which the managers keep within predefined targets. Generally, those with a bias towards bonds will tend to be less risky in terms of volatility (the up and downs of their valuations). The higher-risk funds should be expected to deliver higher returns over the long term, but you are likely to experience bigger short-term swings. There are 4 options to choose from:

Liontrust Sustainable Future Defensive Managed Fund typically offers around 45% exposure to equities and 55% to bonds so would be considered the lowest risk option.

Liontrust Sustainable Future Cautious Managed Fund has an allocation of approximately 60% to equities and 40% to bonds so takes on slightly more risk.

Liontrust Sustainable Future Managed Fund invests between 45–80% equities and 55%-20% in bonds. This variable allocation allows the manager to alter his positioning according to prevailing market conditions.

Liontrust Sustainable Future Managed Growth Fund has the most flexible approach with 60–100% in equities and 0–40% in bonds and/or cash. It should therefore be seen as the highest risk alternative within the range.

A company held across the multi-asset funds is Bright Horizons Family Solutions, a US-based child-care provider. It also offers special needs, family support and services for the education sector. The company is the largest provider of employer-sponsored childcare which removes a barrier to workforce participation faced by many. This service can help improve staff loyalty and reduce turnover.

*All data is from fund factsheets as at 31/5/2021 and TBE fund assessments June 2021

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