Continuing a strong trend for small cap asset managers, Liontrust Asset Management (LIO) is yet another pint-sized fund house
that has been performing well.

For investors who are familiar with this space, the company is larger than Miton (MGR:AIM) but smaller than Polar Capital (POLR:AIM), for example.

The company enjoyed a substantial increase in assets under management (AUM) as it acquired Alliance Trust Investments in April last year.

In the 12 months to 31 March 2018 Liontrust’s AUM was up 61% to £10.5bn, also enjoying inflows into its funds during its financial year of more than £1bn. This was more than double the £482m it managed in the 2017 financial year.

Its closing AUM would have been higher if not for the recent market volatility which wiped £336m off this figure.

Chief executive John Ions described the previous year as ‘transformational’ and for a relatively small asset manager with a market cap of £277m, it had the eleventh highest retail fund sales in the UK.

This position in the list is all the more notable when you consider it includes products offered by the global titans of investing such as the world’s largest asset manager BlackRock.

A HIGHLY DIVERSE OFFERING

Liontrust has a wide variety of funds, growing with the Alliance Trust Investments acquisition which added new products under the Liontrust banner.

Its fund range includes regional income plays such as Liontrust Asia Income Fund (GB00B7BZB324) as well as more esoteric investments such as Liontrust Special Situation Fund (GB00B57H4F11).

Unlike some other smaller asset managers, Liontrust has invested in a bond fund offering with the recruitment of David Roberts, Phil Milburn and Donald Phillips. While bond fund sales performed relatively well last year, the increase in inflation and the first UK rate hike might undermine the attractions and performance of the asset class going forward.

Broker Numis is not overly optimistic on this area of the business, saying ‘we assume only a minimal contribution from the recently hired global fixed income team’.

Liontrust also acquired a sustainable investment team at the start of the past financial year, whose AUM increased in the 12 months by £500m to nearly £3bn.

The diversity of its offering, with funds ranging from mainstream to highly specialised, increases the scope of its appeal to investors.

At 564p the shares trade on 13.4 times Numis’ forecast March 2019 earnings and pay a prospective yield of 4%. The market will get a further opportunity to appraise the company’s performance on 27 June when it reports its March 2018 results in full. (DS)

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