The Structural Opportunities Process | What we offer | Liontrust Asset Management PLC
Liontrust - Global Equity

The Structural Opportunities process

Investment philosophy

The investment process aims to identify structural or fundamental shifts in economies, sectors and markets that result in strong returns for companies that benefit from these changes. As investors are reluctant to recognise fundamental turning points, markets struggle to price the long duration returns that structural change can drive. Change also leads to uncertainty, which is mispriced due to risk aversion.

Structural changes are typically driven by the progress of the economic cycle, the development of industrial cycles, policy changes, mergers, acquisitions or the emergence of new and disruptive technologies. This investment process is designed to capture the excess returns generated by identifying structural change early and estimating the likely magnitude of its impact.


Investment process

  1. 1

    Idea generation

    The team identifies sectors, industries and stocks undergoing structural change. There are a number of important behavioural biases in the market that can lead to structural changes being mispriced in asset valuations, including status quo bias, myopia and risk aversion.

  2. 2

    Stock research

    Once the fund managers have identified structural change, the team produces detailed in-house research on companies involved in the space, including the impact on income, cash flow and balance sheet strength, valuations, share prices, earnings expectations and sell triggers.

  3. 3

    Portfolio construction

    A target price is confirmed for each portfolio stock, and position sizes are determined by allocating each company a score between one and three based on its expected return, historic liquidity and volatility, downside protection and the fund managers’ conviction.

  4. 4

    Regular review

    Portfolios are continually analysed to verify the sources of active risk and any style biases. Position sizes are amended if there are any changes to individual factors determining the score for the stock. Relative out or underperformance of 10% by an individual stock also triggers a review.

Process document

Further information can be found in the Liontrust Structural Opportunities Process document.

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Liontrust's Global Equity team
Patrick Cadell, Kristof Bulkai & Hugo Rogers 
The Global Equity team

Patrick Cadell, Kristof Bulkai and Hugo Rogers have 34 years of combined investment experience and formerly worked at Thames River Capital and BMO Global Asset Management. Among other previous roles, Hugo was an analyst at Odey Asset Management, Patrick was an investment analyst at Nevsky Capital and Kristof was a European and emerging markets portfolio manager at Griffin Capital.

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Disclaimer:
• Past performance is not a guide to future performance. • Do remember that the value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.  • Investment in Funds managed by the Structural Opportunities Team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates.

• The information and opinions provided should not be construed as advice for investment in any product or security mentioned.  • Always research your own investments and consult with a regulated investment adviser before investing.
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