We were recently disappointed to learn Jan Luthman had stepped down as co-manager of Liontrust Macro Equity Income. He was an experienced investor and an expert in the analysis of the wider economic, political and social environment. We viewed his opinions in this area as instrumental to the fund’s overall positioning and believe he added value for investors during his tenure.
The fund is now managed by Stephen Bailey, who co-managed the fund alongside Jan Luthman since its launch in October 2003; and Jamie Clark, who has worked with the team since 2003 and became a co-manager in 2008. We recently met both managers for an update.
There are no changes planned to the fund’s investment approach. Stephen Bailey and Jamie Clark will continue to use the thematic approach that has been in place since launch. This means they will aim to identify and interpret major economic, political and social developments affecting the UK and the rest of the world. This helps them decide which companies are best-placed to prosper over the long-term.
Current themes include the increased use of smartphones to access the internet and watch videos; the critical role of pharmaceutical and healthcare companies to research and treat diseases; and the rising burden on individuals to save for their own retirement.
The fund therefore has investments in telecommunications companies such as BT, Vodafone and Sky; pharmaceutical giants GlaxoSmithKline and AstraZeneca; and life insurance and wealth management firms such as Aviva, Schroders and Jupiter.
The fund is concentrated, which enables each investment to have a significant impact on returns, but it is higher risk.
The loss of an experienced investor is always a negative, in our view. While Stephen Bailey and Jamie Clark are experienced individuals who have worked together for many years we feel they have lost an important resource, particularly when it comes to deciding the themes set to shape the investment landscape.
We removed this fund from the Wealth 150 in September 2014. While performance has been good over the long term, in recent years it has been broadly in line with the average fund in the sector and we felt there were better options available.
The fund has also struggled this year, particularly in the wake of the UK’s referendum on EU membership. Less exposure to traditional high-yielding companies, such as those in the tobacco and consumer staples sectors, counted against the managers as investors sought safety among large companies with international earnings. Exposure to some UK-focused medium-sized and higher-risk smaller companies also held back performance.
We do not believe the team’s investment process is broken and they could still deliver good returns over the long term. However, Stephen Baily and Jamie Clark need to prove they can add value for investors without the input of Jan Luthman. We will continue to monitor the fund and update investors if our views change. The funds we feel offer the best combination of performance potential and low charges can be found on the Wealth 150+.
Please note the charges can be taken from capital which can increase the yield but reduces the potential for capital growth.