Following a strategic review, fund manager Liontrust Asset Management (LIO) has agreed to sell its Asia Income Team to Somerset Capital Management for up to £2 million in a deal expected to complete in the first quarter of 2021.
Liontrust is also shutting down its European income and Macro Thematic investment teams, which had combined assets under management and advice (AuMa) of £195 million at last count, with the affected portfolios to merge with other funds in the Liontrust range.
Shares in the asset manager were marked down 7.5p to £13.13 on Friday as investors reacted to the modest reduction in funds under management, although analysts agreed this is a sensible bit of housekeeping by Liontrust.
WHO’S OFF TO SOMERSET?
Asia Income Team trio Mark Williams, Carolyn Chan and Shashank Savla will join Somerset and take the £82 million Liontrust Asia Income Fund with them, although the Liontrust GF Asia Income Fund is not part of the sale and will be closed by the end of this month.
Outlining the rationale behind the disposal, John Ions-led Liontrust explained it has enjoyed significant growth over the past few years, having added the Sustainable Investment, Global Fixed Income and Global Equity teams since 2017.
Furthermore, the completion of the acquisition of the Architas UK Investment Business at the end of this month will boost Liontrust’s AuMA to more than £25 billion.
‘As a result of this rapid growth, we have been reviewing our fund ranges and evaluating where best to devote our resources and strategic focus over the next few years,’ commented Liontrust, which believes the sale to Somerset, a specialist Emerging Markets and Asian equities fund management business, ‘is in the best interests of the investors in the fund, the Asia Income Team and Liontrust shareholders.’
This review has also led to Liontrust deciding to close the underperforming European Income and Macro Thematic investment teams.
SENSIBLE SET OF DECISIONS
With a ‘buy’ recommendation on Liontrust, broker Numis anticipates these changes ‘will be at least profit and loss neutral and more likely modestly accretive. There will also be a benefit of increased simplification and freed up internal resource (such as sales/marketing) to focus on the core funds seeing the best growth prospects. We therefore regard this as a very sensible set of commercial decisions.’
There was also reaction on Twitter, where Ryan Hughes, head of active portfolios at AJ Bell, described developments as ‘a sensible move from Liontrust’. Hughes remarked that the Liontrust fund range has grown ‘very large after acquisitions’ and he would rather they ‘focus on their key competencies’.
‘Housekeeping today at Liontrust with sale of Asia Income team to Somerset and closure of Euro Income and Macro Thematic funds with assets transferred to other Liontrust teams,’ chirped Shore Financial Planning’s Ben Yearsley on Twitter. ‘Other groups take note?start simplifying your fund ranges.’
And Chelsea Financial Services’ Darius McDermott commented: ‘At a time when value for money is so important, if something is not working for investors, taking the decision to close these funds seems appropriate and will allow Liontrust to focus on its core competencies that are doing extremely well for its customers.
‘Asian Income has also found a nice home at Somerset. It’s a sensible transfer from a company that doesn’t have a focus on Asia to an asset manager that does, and this would also seem a good outcome for investors.’
Shares highlighted the attractions of Liontrust Asset Management here back in February. One of the key things we like about the fund management group is the clarity of its investment processes.
