A traditional “active” approach to fund management based on expert stock picking is rarely successful: the vast majority of fund managers fail to beat their benchmark over time.
This is why at Liontrust we do things differently. Liontrust has developed proprietary investment processes. These processes start with a simple premise: the best way to consistently beat the market is to exploit the mistakes made by other investors.
Each investment process is the result of rigorous research and testing to ensure it is capable of delivering superior long-term performance. This focus on proprietary investment processes that are robust, repeatable and scaleable means we can :
- Benefit from errors made by other investors.
- Reduce the effect of human emotion on our portfolios.
- Screen out short-term market “noise”.
- Deliver more consistent long-term performance.
Investment processes are the key to consistency and the effective control of risk. But, of course, no process will work 100% of the time. There will be periods of underperformance. But we stick to our processes because we understand why they underperform during these short-term periods and we know they can deliver outperformance over the long term.
Our investment processes are applied to different types of funds. The portfolio for each fund based on the same process is the same. Each process is explained in detail in documents that are available on this website.
As well as developing processes, we believe investment success is also based on a working environment that enables fund managers to cope with the psychological and practical challenges of fund management.
At Liontrust, therefore, we make sure our managers can concentrate on running their portfolios without interference. As a specialist investment house, we have found that the steering groups and hordes of analysts, that you find at big companies, are simply distractions for us because they don’t add any value for our clients. Instead, we remove these obstacles so our managers can focus purely on performance.
Our approach, therefore, offers many benefits to investors :
- It helps us to deliver sustainable outperformance over the long term by exploiting the mistakes of other investors.
- It makes it easy for advisers and investors to understand what we do and why.
- It means the way we manage money is predictable and repeatable.
- It reduces the effect of human emotion on our portfolios.
All our fund managers have to be able to justify what they do, to each other and to our investors. Basing our business around verifiable processes means we can inspire confidence.