Interactive Investor

Liontrust to launch ESG investment trust

11th May 2021 17:56

Tom Bailey from interactive investor

This environmental, social and governance (ESG) trust is the asset manager's first closed-end investment trust strategy.

Liontrust has announced that is it launching a new environmental, social and governance (ESG) investment trust.

The trust will launch with a £150 million initial public offering under the name Liontrust ESG, with the ticker ESGT.

The trust will have a fairly concentrated strategy, investing in between 25 and 35 companies. The portfolio will mostly be composed of companies in developed markets.

Liontrust already runs several ESG and sustainability focused open-ended funds. According to the asset manager, through these open-ended funds and several institutional mandates, Liontrust’s Sustainable Investment team oversees around £10.2 billion worth of assets, up from £2.5 billion in 2017.  

This launch, however, will be Liontrust’s first closed-end investment trust strategy. According to the asset manager, the closed-end structure is attractive due to the fixed pool of capital it provides. This ‘permanency of capital’ will have the advantage of allowing the managers to be less concerned about shorter-term volatility and liquidity, in comparison to managing open-ended funds.

As a result, the Liontrust ESG portfolio will be fairly concentrated and be able to invest in several small-cap stocks that are not currently investable for Liontrust’s open-ended funds.

The trust will be managed by Peter Michaelis, Simon Clements and Chris Foster, who are part of the Liontrust Sustainable Investment team.

The trust will have a fee of 0.65%. However, 10% of the management fee that Liontrust receives from the trust will be used to “fund research to identify and develop financial instruments covering those UN Sustainable Development Goals (SDGs) that are currently uninvestable”.

Commenting on the launch, John Ions, chief executive of Liontrust, added: “This is a significant launch for Liontrust in expanding our offering into investment trusts. 

“The intention to launch ESGT recognises the growing demand for sustainable investment as an increasing number of people want their investments to make positive contributions to society, the environment and the economy. 

“ESGT will enable a wider range of investors to access Liontrust’s Sustainable Investment team and its proven process. Over the past two decades, the Sustainable Investment team has demonstrated the ability of its investment process to outperform mainstream benchmarks and the impact of its funds on sustainable development.” 

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