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UK Growth Funds

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested.

What is a UK growth fund?

The UK is a major economy and has one of the world’s premier stock markets.

As such, it offers a wealth of opportunities for investors looking for capital growth and to generate income.

A UK growth fund, however, would suit those investors seeking the former of these two options. It invests in companies that are expected to grow faster than others in the market to increase the value of investors’ capital.

Why a UK growth fund?

Seeking capital growth is an essential part of any long-term investment strategy. The longer investors stay invested, the greater the chances that their capital will grow.

The UK is renowned as a trusted commercial environment. It was ranked eighth in the World Bank’s Ease of Doing Business Index in 2019 and its rule of law, regulatory system and property rights make it a highly attractive market in which to operate, trade and invest.

Although the UK became an ‘unloved’ investment market after it left the European Union, the fact remains that it has a robust economy and offers outstanding capital growth opportunities for investors who are happy to invest for the long term.

The UK has a broad range of companies with capital growth potential. There are many that are small and expanding fast: they reinvest their profits to finance expansion rather than pay dividends to shareholders. However, there are also many fast-growing businesses to be found in the mid and large-cap sectors of this market. For more information on growth as a form of ’style’ investing, see our guide.

The benefits of using funds

If you feel you do not have the time, knowledge or inclination to manage your own portfolio of investments, you can delegate this to a professional manager by investing in a UK Growth fund. 

By investing even just a few hundred pounds in a growth fund, you can usually obtain exposure to far more assets and industry sectors than you can by investing directly in the market yourself.

Investing in growth funds will usually involve taking on a certain degree of risk, however. Learn more about understanding your risk profile here.

Funds offer tax benefits, too. In the UK, they can transact investment assets free of capital gains tax (CGT). This is not the case if you manage your own portfolio unless it is held within a tax-efficient wrapper such as and Individual Savings Account (ISA). We suggest you consult a professional adviser about the tax implications of your investments.

The Liontrust UK Growth Fund

The Liontrust Special Situations Fund has been managed since launch in November 2005 by Anthony Cross, who was joined by his co-manager Julian Fosh in 2008, while the Liontrust UK Growth Fund has been managed by Anthony and Julian since March 2009. 

The Liontrust Special Situations Fund aims to deliver capital growth over the long term (5 years or more) through using the Economic Advantage investment process. The process seeks to identify companies with a durable competitive advantage that allows them to defy industry competition and sustain a higher than average level of profitability for longer than expected. The Fund invests at least 90% of the portfolio in companies incorporated, domiciled or which conduct significant business in the UK.

The UK Growth Fund aims to deliver capital growth over the long term (5 years or more) through using the Economic Advantage investment process. The process seeks to identify companies with a durable competitive advantage that allows them to defy industry competition and sustain a higher than average level of profitability for longer than expected. The Fund invests at least 90% of the portfolio in companies incorporated, domiciled or which conduct significant business in the UK.

The Economic Advantage investment process

The process seeks to identify companies that possess intangible assets which produce barriers to competition and provide a durable competitive advantage that allows the companies to defy industry competition and sustain a higher-than-average level of profitability for longer than expected. In the fund managers’ experience, the hardest characteristics for competitors to replicate are three classes of intangible asset: intellectual property, strong distribution channels and significant recurring business.

Selecting the best manager is a challenge

The funds offered by Liontrust are actively managed, meaning that you have a professional determining which assets to invest in at any given time. When selecting a UK growth fund, we recommend you seek the advice of a financial adviser.