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Liontrust - European Income - Olly Russ

The European Income process

Investment philosophy

The fund managers have three objectives in managing the funds:

  1. 1

    A yield that is higher than the market;

  2. 2

    An income stream that grows in the long run faster than inflation; and

  3. 3

    Long-term capital growth that is at least in line with inflation.

The fund managers seek to achieve these aims through investing in growing companies with low capital requirements that pay out expanding dividends. They use dividend growth as a proxy for earnings growth – and expect to see dividends rising over time as companies increase pay outs to shareholders while earnings grow. Since dividends are paid out in cash, companies with increasing pay outs will need to produce high quality cash earnings, with less scope for artificial inflation through financial manipulation or lower quality numbers.

The fund managers also expect the value of companies with strong and growing dividends to increase at least in line with inflation over the long term. They believe a company targeting shareholder pay outs should help improve management focus on capital discipline, which can help to sustain higher valuations and avoid value-destroying actions.

They are typically more stable, mature and secure companies, whose asset base and business has been built up over many years and is defended by an economic moat – an economic edge, competitive advantage or assets that are hard to replicate by new entrants, such as a strong brand, niche products or a dominant market position. 

Investment process

Owning the types of companies described above may not alone produce market outperformance. To produce superior risk-adjusted returns, the fund managers look for companies with these characteristics that are also undervalued. They are generally seeking quality companies (cash generative and well established businesses with hard-to-replicate assets) with a good record of dividend growth and where the market has mispriced or underestimated their future earnings potential. In searching for mispriced assets, the fund managers look to take advantage of:

  1. 1

    Growth opportunities: where the market underestimates earnings/dividend growth

  2. 2

    Value opportunities: where the market undervalues the expected earnings or dividend potential

  3. 3

    Special situations: where there are opportunities for corporate change that will drive improved dividends

Process document

Further information can be found in the Liontrust European Income Process document.


Liontrust European Income team
Olly Russ & Oisin O’Leary 
The European Income team

Olly Russ and Oisin O’Leary have a combined 25 years of investment and capital markets experience. Olly joined Liontrust in July 2016, having started his career at investment boutique Orbitex in 1998. At Orbitex, Olly worked on European Equity and UK Income funds and was responsible for running the Orbitex UK Equity Fund from its inception in March 2000.

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Citywire - Fund Manager rated A
Olly Russ
Citywire Manager rating: A
Morningstar Sustainability rated 4
Liontrust European Enhanced Income Fund
Morningstar Sustainability Rating: 4
Rayner Spencer Mills - R Rated Fund
Liontrust European Income Fund
Rayner Spencer Mills rated

• 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 European Income Team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. • The Funds' expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. • Investment in the European Enhanced Income Fund writes out of the money call options to generate additional income. These call options will be “covered”. Unitholders should note that potential capital growth of the Fund would be capped if these call options are exercised against the Fund and the Fund’s capital returns are likely to be lower than the market in periods of rapidly rising share prices.

• 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.

Citywire information is proprietary and confidential to Citywire Financial Publishers Ltd ('Citywire'), may not be copied and Citywire excludes any liability arising out of its use. © 2018 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.  Past performance is no guarantee of future results.

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