Liontrust blames budget distress as investors continue to cash out

Asset manager Liontrust has blamed concerns over the looming Government budget as investors continue to cash out of their funds.

Liontrust recorded net outflows of £1.1bn for the three months ended September 30, helping to reduce total assets under management and advice by 4 per cent to £26bn.

This follows net outflows of £900m in the previous three months after investors withdrew more than £6bn in total during 2023, and Liontrust’s assets fell more than 20 per cent from around £33.5 billion by the end of the company’s 2022 financial year.

Chief executive John Ions told investors that “speculation and uncertainty” over taxes ahead of the October 30 budget had “hit investor confidence and fund flows for the entire industry”.

Data from fund network Calastone shows that bond funds suffered outflows of around £1.3bn in August and September, after net inflows of just £84m in July.

Share funds recorded outflows of £564m last month, but recorded combined inflows of more than £2.7bn in July.

“This has contributed to another quarter of net outflows as the challenging environment for active managers has continued for longer than anticipated,” Lions added, having previously praised the new Government’s “pro-growth agenda”.

The fund manager, which last year was forced to abandon an attempted takeover of Swiss rival GAM, has struggled with a relatively large exposure to small and medium-sized British shares and sour sentiment towards ESG investing.

A large portion of its assets are in funds sold to retail investors, who have proven quick to sell this year.

Industry figures show that retail equity funds have been the most exposed to the recent selling pressure, with funds targeting UK assets being the most exposed.

Retail investors accounted for £904m of Liontrust’s quarterly outflows, compared to net outflows of £123m from institutional investors.

Ions said: ‘Liontrust is deepening engagement with customers, which is essential to retaining assets and returning the business to positive net flows.

‘The investment teams will be presenting at a wide range of Liontrust and third-party events across the UK and Europe this autumn, including a debate on the UK stock market and economy in the House of Commons this week. last year and a Liontrust investment conference in November in London.

“Despite the current difficult period for active managers, Liontrust is well positioned to drive the business forward.”

leontrust stock They were down 2.8 per cent in early trading at 513 pence, taking 2024 losses to 15.2 per cent.

RBC Brewin Dolphin senior investment manager John Moore said: “Active investment managers have generally faced a torrid time with market returns skewed towards larger companies, which have been easier and cheaper to capture passively”.

‘However, these trends change and Liontrust has built a well-recognized name with a strong long-term track record in the sector and a distinctive investment approach, putting it in a strong position to weather difficult periods such as this.

“Scale is increasingly important in the fund management industry and Liontrust has expanded inorganically in the past; the company can see further opportunities in the changing landscape in the future.”