Liontrust Asset Management PLC · LSE:LIO
Liontrust Asset Management — Non-Deal Roadshow (September 2023)
54 slides from Liontrust Asset Management's roadshow presentation, Sep 27, 2023
Slide 1: Liontrust Sustainable Investment Roadshow
For UK audience only Liontrust Sustainable Investment Roadshow Winter 2023 W inner W inner Best Active Investme nt Solut ion Best ESG Investme nt Provider Solut ion Provider For professional investors and advisers only
Slide 2: Key risks
Key risks Past performance does not predict future returns. You may get back less than you originally invested. We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments The Funds managed by the Sustai
Slide 3: Learning objectives
Learning objectives Explain the key sustainable investment themes and how these will help to create a cleaner, safer and healthier world over the next decade Understand how engagement with businesses encourages change Identify the impact of regulation on the sustainable advice process Explain potent
Slide 4: Renewable energy in the UK
Renewable energy in the UK Coal, % Renewables, % (wind, solar, hydro, biomass) Carbon intensity, gCO2e/kWh 50% 29.3% 40% last 30% decade Electricity 20% 5.7% 5X generated in UK 0.2% (%) 10% 0% 600 500 400 483 last 257 300 485 decade Carbon intensity of grid 200 -47% (gCO2e/kWh) 100 0 2000 2001 2002
Slide 5: That is what we look for!
Genome sequencing $100,000,000 What do they have in common? $10,000,000 Make our lives better $1,000,000 Delivered by fast growing Moore’s Law profitable businesses $100,000 Cost fallen by 1,000,000 X That is what we look for! $10,000 $1,000 $100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 6: Philosophy
Philosophy The Liontrust Sustainable Future investment process looks to find sustainable companies which we believe have better growth, and are more resilient than the market gives them credit for We use this underappreciated advantage to seek to deliver outperformance in equity, bond and multi asse
Slide 7: 20 areas of predictable and resilient growth
Thematic analysis | Strong and dependable growth prospects Better Resource Improved Greater Safety Efficiency Health & Resilience 1. Improving the efficiency of energy 7. Providing affordable healthcare 15. Increasing financial resilience use 8. Connecting people 16. Saving for the future 2. Improvi
Slide 8: Theme | Delivering a circular materials economy
Theme | Delivering a circular materials economy ½ Up to Britain: United States: 1.9m tonnes per year 38m tonnes per year 500bn plastic bags used 381m tonnes of plastic Up to half is single-use every year waste produced each year Source: The United States’ contribution of plastic waste to land and oc
Slide 9: Trex decking market
Thematic analysis | Strong and dependable growth prospects Traditional wood decking dominates the decking market by 75% share $75bn $8bn $2bn US outdoor US decking & US composite living railing market decking & railing Lower seasonal maintenance; Wood Alternative Decking & Railing Geography North Am
Slide 10: Trex | Characteristics
Trex | Characteristics 01 THEME 02 SUSTAINABILITY MATRIX 03 BUSINESS FUNDAMENTALS 04 VALUATION UPSIDE Delivering a circular material economy B3 #1 15x market share P/E 2028 95% 42% fewer GHG emissions 26% 15% ROIC IRR of materials are from recycled sources 48% fewer air pollutants vs traditional 12%
Slide 11: Intuitive Surgical | Da Vinci Robot
Intuitive Surgical | Da Vinci Robot Fewer Shorter time complications in hospital Quicker Lower overall recovery cost All use of company logos, images or trademarks in this presentation are for reference purposes only 10
Slide 12: Intuitive Surgical | Characteristics
Intuitive Surgical | Characteristics 01 THEME 02 SUSTAINABILITY MATRIX 03 BUSINESS FUNDAMENTALS 04 VALUATION UPSIDE Enabling innovation in healthcare 18% 36x ROIC P/E #1 A3 Market leader 15% 59% revenue growth price upside 20% EPS growth Source: Liontrust, as at 07.07.20. ROIC – Return on Invested C
Slide 13: Identifying superior stocks: four filters to uncover quality
Identifying superior stocks 01 Thematic analysis – identifies companies with strong and dependable growth prospects due to alignment with our themes 02 Sustainability analysis – focuses on those companies with excellent management and core products or services that contribute to society or the envir
Slide 14: Liontrust SF Managed Fund | Snapshot
Liontrust SF Managed Fund | Snapshot Themes 10.2% Improving the efficiency of energy use 3% 1% 0% 10% 5% 7.1% Improving the resource efficiency of industrial and agricultural processes 3.8% Delivering a circular materials economy 3% 2.6% Improving management of water 3% 7% 1.8% Increasing electricit
Slide 15: Voting summary 2022
Voting summary 2022 In 2022, the Liontrust Sustainable Investment Team voted at 100% (133 of 133) votable meetings and voted against management or abstained on proposals on at least one vote in 58% (77 of 133) of votable meetings In 2022, the Liontrust Sustainable Investment Team Liontrust voted to
Slide 16: Engagement summary 2022
Engagement summary 2022 Engaged with 146 face-to-face 242 228 companies meetings webinar/calls Raised 285 106 requests for key ESG issues change Source: Liontrust, March 2023. Multiple ESG issues were raised with some companies 15
Slide 17: Risk rating of fund range
Risk rating of fund range Past performance does not predict future returns 10yr DT risk Defaqto Comparator 1yr quartile 3yr quartile 5yr quartile quartile rating risk rating benchmark ranking ranking ranking ranking Ratings* SF Defensive IA Mixed Investments Managed 4 3 (20-60% shares) 4 4 3 - SF Ca
Slide 18: Current positioning: asset allocation for managed funds
Current positioning Asset allocation for managed funds 100% 0.1 0.4 0.3 2.2 0.8 5.5 5.5 5.5 13.6 90% 19.3 17.7 80% 27.4 70% 24.1 36.4 60% 4.5 50% 92.2 93.7 19.6 40% 4.5 14.5 30% 52.4 20% 34.5 25.2 10% 0% SF Defensive Managed SF Cautious Managed SF Managed SF Managed Growth SF Global Growth Global ex
Slide 19: Asset Allocation
Asset Allocation Cash • Move to underweight to fund Gilt Purchase • Continue to reduce underweight and increase duration Gilts • Ending more than a decade of being maximum underweight • Gilts now offering more attractive returns than cash • Maintain overweight position Corporate • Impacted by rising
Slide 20: 3-year performance of SF Managed range
Liontrust Sustainable Future | 3-year performance of SF Managed range Past performance does not predict future returns 3-year performance (Oct 2020 to Oct 2023) SF Global Growth 0.4% IA Global 19.0% Performance impacted by: SF Managed Growth 0.9% Rapid rise in interest rates depressing corporate bon
Slide 21: FTSE All World Sector Performance | Winners & Losers 2022
FTSE All World -7.8% Energy 47.7% Aerospace & Defense 28.9% Tobacco 24.4% Nonlife Insurance 21.1% Industrial Metals & Mining 20.5% Pharmaceuticals & Biotech 14.8% Beverages 10.8% Life Insurance 10.4% Electricity 10.0% Utlities 8.9% Food Producers 5.8% Health Care 5.5% Basic Materials 3.9% Financials
Slide 22: 7-year performance of SF Managed range
Liontrust Sustainable Future | 7-year performance of SF Managed range Past performance does not predict future returns 7-year performance (Oct 2016 to Oct 2023) Performance impacted by: SF Global Growth 83.8% The Liontrust Sustainable Future funds invest for the longer term IA Global 63.1% The time
Slide 23: The Case for Credit | Historical Context / Valuations
The Case for Credit | Historical Context / Valuations Investment Grade Yields (since 2000) 10 9 8 7 Corporate bonds offer attractive yields 6 Yield (%) 5 SF process identifies high quality issuers 4 As yields fall there is the potential for incremental capital gains 3 2 £ Credit - Total Yield Curren
Slide 24: Global valuation
Global valuation Price to 3-Year Forecast Sales Estimated 3-5 Year EPS Earnings* Growth Growth SF Global Growth 22.8x 9.1% 16.7% example portfolio MSCI World 16.7x 7.9% 13.0% Source: Liontrust, Factset, 30.09.23, methodology: 12m forward P/E uses Weighted Harmonic Average. 3y Forecast Sales Growth a
Slide 25: Outlook: structural growth from sustainable equities
Outlook equities Structural growth from US EU China sustainable themes IRA Fit for 55 Electric vehicles ($485 billion) Energy Efficiency Revolution in healthcare Early diagnosis Affordable medicines and vaccines Healthy lifestyles 24
Slide 26: Conclusion
Conclusion Decades of growth ahead for sustainable companies After a tough 2022 we believe the outlook for all the range is very positive Engaging with businesses to encourage change Next 20 years will be as exciting and rewarding as the last… 25
Slide 27: Liontrust
» LIONTRUST COURAGE - POWER - PRIDE
Slide 28: Learning objectives
Learning objectives Explain the key sustainable investment themes and how these will help to create a cleaner, safer and healthier world over the next decade Understand how engagement with businesses encourages change Identify the impact of regulation on the sustainable advice process Explain potent
Slide 29: Why consider a Sustainable Centralised Investment Proposition?
Why consider a Sustainable Centralised Investment Proposition? FCA = Financial Conduct Association 28
Slide 30: Existing regulatory requirements in the UK
Existing regulatory requirements in the UK MIFID / PROD (2018) Firms must understand the financial instruments it distributes Identify and document the individual needs of your clients. 2018 Identify and document your target markets. Conduct due diligence in line with a client suitability framework
Slide 31: Sustainable Disclosure Requirements | Key Proposals
Sustainable Disclosure Requirements | Key Proposals Sustainable Disclosure Requirements Sustainable investment labels Consumer-facing product-level disclosures More detailed sustainability disclosures Product naming and marketing rules A general “anti-greenwashing rule” for all regulated firms Sourc
Slide 32: Sustainable Disclosure Requirements | Sustainable Investment Labels
Sustainable Disclosure Requirements | Sustainable Investment Labels Proposed sustainable investment label descriptions and objectives No sustainable label Sustainable focus Sustainable improvers Sustainable impact Description Products that do not Products with an objective to Products with an object
Slide 33: Sustainable Disclosure Requirements | Sustainable Investment Labels
Sustainable Disclosure Requirements | Sustainable Investment Labels Proposed sustainable investment label descriptions and objectives No sustainable label Sustainable focus Sustainable improvers Sustainable impact Description Products that do not Products with an objective to Products with an object
Slide 34: Sustainable Disclosure Requirements | Sustainable Investment Labels
Sustainable Disclosure Requirements | Sustainable Investment Labels Proposed sustainable investment label descriptions and objectives No sustainable label Sustainable focus Sustainable improvers Sustainable impact Description Products that do not Products with an objective to Products with an object
Slide 35: Sustainable Disclosure Requirements | Sustainable Investment Labels
Sustainable Disclosure Requirements | Sustainable Investment Labels Proposed sustainable investment label descriptions and objectives No sustainable label Sustainable focus Sustainable improvers Sustainable impact Description Products that do not Products with an objective to Products with an object
Slide 36: Sustainable Disclosure Requirements | Sustainable Investment Labels
Sustainable Disclosure Requirements | Sustainable Investment Labels Proposed sustainable investment label descriptions and objectives No sustainable label Sustainable focus Sustainable improvers Sustainable impact Description Products that do not Products with an objective to Products with an object
Slide 37: Considerations for advisers
Considerations for advisers
Slide 38: The Intergenerational Wealth Transfer | Threat or Opportunity?
The Intergenerational Wealth Transfer | Threat or Opportunity? £ £ £ £ £ £ £ £ 37
Slide 39: Clients most interested in sustainable investment are the under 40s
A higher proportion of intermediaries in this wave feel that clients most interested in Sustainable Investment are the under 40s Clients most interested in sustainable investment 54% 43% 34% 26% 19% 10% Under 30 30 – 40 41 – 50 51 – 60 61 – 70 Over 70 Dec-22 Source: Research in Finance, Liontrust Ad
Slide 40: Concern about greenwashing remains high among DFMs and IAs
Concern about greenwashing remains high among both DFMs and IAs Concern about greenwashing Confidence of identifying greenwashing Yes No Don't know what greenwashing is Linear (Yes) Highly confident Moderately confident Slightly confident Not confident 100% Dec-22 5% 46% 27% 23% 80% 78% Jul-22 9% 41
Slide 41: Considerations for a Sustainable CIP | ESG Ratings Comparison
Considerations for a Sustainable CIP | ESG Ratings Comparison Low correlation High correlation 0%-25% 25%-50% 50%-75% 75%-100% MSCI S&P Sustainalytics CDP ISS Bloomberg MSCI 35.7% 35.1% 16.3% 33.0% 37.4% S&P 35.7% 64.5% 35.0% 13.9% 74.4% Sustainalytics 35.1% 64.5% 29.3% 21.7% 58.4% CDP 16.3% 35.0% 2
Slide 42: Considerations for a Sustainable CIP | Active vs Passive
Considerations for a Sustainable CIP | Active vs Passive ACTIVE Methodology Replication VS Voting PASSIVE Engagement 41
Slide 43: Considerations for sustainable investment proposition
Considerations for sustainable investment proposition Inputs Governance Target client Service Vulnerable structure definitions (or product) design circumstances approach Provider VFM Research and Provider target Your VFM assessments due diligence market material assessment Outputs Provider service C
Slide 44: Considerations when assessing clients' ESG suitability
Considerations when assessing clients’ ESG suitability Ensure clients understand what is meant by ESG in clear and simple language Appreciate that client responses can fall across a wide spectrum of attitudes and preferences Document how clients’ ESG preferences have been considered for each investm
Slide 45: Liontrust language of sustainable/ESG investing
Liontrust language of sustainable/ESG investing A myriad of terms… Defining ESG Responsible Responsible Impact Responsible Sustainable Ethical Stewardship Ethical Impact Environmental Social Governance Engagement Engagement Stewardship Sustainable Responsible Engagement Responsible ● Climate crisis
Slide 46: Consumer Duty
Consumer Duty Source: Assessment of Value | Liontrust Asset Management PLC | Sustainable Investment documents | Liontrust Asset Management PLC 45
Slide 47: Sustainable Investment at Liontrust
Sustainable Investment at Liontrust People Investment Process Experienced Team – 16 strong Liontrust Sustainable Distinct, rigorous and repeatable process – investing in Investment Team companies that aim to deliver profits from positive Long-term Track Record – Since 2001 impact Pioneers – Founder
Slide 48: Liontrust Sustainable Investment Managed Fund range | Awards and ratings
Liontrust Sustainable Investment Managed Fund range | Awards and ratings Liontrust W inner Best Active W inner Best ESG Investme nt Investme nt Solut ion Provider Solut ion Provider SF Managed 1, 2, 3, 4, 5, 6, 7, 8, 9, 11, 12, 14, 15, 16, 17 SF Defensive Managed 1, 2, 3, 5, 6, 14, 15, 16, 20 SF Man
Slide 49: Conclusion | Three Reasons
Conclusion | Three Reasons Strong Investment Regulatory Client Case Requirement Requirement ● Attractive Valuations ● MIFID II ● Client Demand ● Large team ● Consumer Duty ● Transfer of Wealth ● Consistent Process ● Sustainable Disclosure ● New Investors Requirements 48
Slide 50: Important information
» LIONTRUST COURAGE - POWER - PRIDE Important information
Slide 51: Discrete performance
Discrete performance Past performance does not predict future returns To previous quarter 12 months ending (%) Sep-23 Sep-22 Sep-21 Sep-20 Sep-19 Liontrust Sustainable Future Managed 2 Inc 4.1 -20.9 20.3 15.7 9.9 IA Mixed Investment 40-85% Shares 5.1 -10.2 16.6 -0.2 4.2 Liontrust Sustainable Future
Slide 52: Disclaimer
Disclaimer This document 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 sec
Slide 53: Global Investment Performance Standards (GIPS) Sustainable Future – Managed
Global Investment Performance Standards (GIPS) Sustainable Future – Managed Composite: Sustainable Future – Managed Composite Inception Date: 01 January 2009 Reporting Currency: GBP Reporting Date: 31 December 2022 Benchmark: IA Mixed Investment 40-85% sector average Benchmark Composite Benchmark Co
Slide 54: Global Investment Performance Standards (GIPS) Sustainable Future – Managed
Global Investment Performance Standards (GIPS) Sustainable Future – Managed 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’
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