Fund buyers have welcomed Liontrust’s first steps into the closed-ended space with the launch of a sustainable investment trust, but think the sector needs to catch up with servicing the growing demand for ESG strategies.
Sustainable investments account for more than £10bn of Liontrust’s assets under management and “continues to generate strong sales”, according to chief executive John Ions (pictured). Overall, Liontrust’s assets increased by 92% to hit £30.9bn at the end of March.
To expand its sustainable product offering, Liontrust announced in is Q1 trading update on Wednesday the intention to launch a sustainable investment trust, its first closed-ended vehicle, in “late June” which will be managed by the sustainable investment team.
Popularity of sustainable trusts
The popularity of sustainable investment trusts is gathering speed as Liontrust’s announcement follows the launch of three sustainable investment trust this year alone. The Cordiant Digital Infrastructure Trust, the VH Global Sustainable Energy Opportunities Trust and the Digital 9 Infrastructure Trust all launched in 2021, while Schroders launched the British Opportunities Trust and the BS C Social Impact Trust in December last year.
Association of Investment Companies communications director and ESG Clarity editorial panellist Annabel Brodie-Smith said: “There is a clear industry trend of ESG and sustainable investment company launches and the closed-ended investment company structure is particularly suited to these assets.”
AJ Bell head of active portfolios Ryan Hughes also welcomed the launch, describing the investment trust structure as attractive and enables the fund manager “much more certainty over the level of assets without the worry of having to manage the daily inflows and outflows”.
He added: “Given the long-term approach taken by Liontrust and the fact some money that has recently come into ESG funds may be short-term profit seeking rather than long-term investment, focusing on the trust structure seems sensible.”
Room for new entrants
Tilney managing director Jason Hollands said the Sustainable Futures team at Liontrust has a strong pedigree but the asset manager does not currently manage any investment trusts and so this is a new departure for them.
He added: “While there are a number of investment companies focused on specific niches, such as renewable energy infrastructure, the investment trust sector has been relatively behind the curve in servicing the growing demand for ESG strategies.
“There are some notable exceptions such as Impax Environmental Markets, Jupiter Green and Keystone Positive Change, but there is certainly room for a new entrant and so I think the launch should be well received.”
A version of this article first appeared on Portfolio Adviser
