Liontrust ready to pounce

Turmoil in emerging markets equities and rock-bottom bond yields are increasingly pushing investors towards developed markets equities. The recent CREATE-Research global investor survey reported an "emerging pragmatism" among institutional fund managers, who are increasing their equity allocations, going so far as to suggest the 'bondification' of the asset class. Liontrust's March-end results showed assets under management (AUM) had shot up by almost a quarter to £4.5bn, although the three months to the end of June were quieter.

Liontrust has improved its distribution processes to better serve its three tranches of clients: strategic partners, such as Standard Life (SL.); its specialist wealth management and asset manager clients; and retail investors via the intermediary market. What's more, growing distribution to continental Europe also offers potential. Should sales increases cause profitability to rise, as is expected, growth should be strong. Broker N+1 Singer expects a compound annual EPS growth rate of 23 per cent between 2015 and 2018.

While markets are a key determinant of every fund manager's fortunes, and equity markets have scuttled sideways as the Greek crisis has dragged on, Liontrust's major strategies track the UK equity market, which has performed relatively well compared with overseas counterparts. Diversifying into the 'alternatives' arena, with a global water and agriculture fund due to be launched this year, should help the manager ride out inevitable equity markets swings.

Investment performance of established funds has been solid, with seven out of Liontrust's eight actively managed equity trusts in the top quartile for performance since launch, or since the current fund managers were brought onboard. The dividend is also growing fast and the manager has a solid balance sheet with a healthy net cash position.