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Fund manager Liontrust has confirmed it is planning to launch an investment trust, its first ever, targeted specifically at companies in the ESG space. Called the Liontrust ESG Trust Plc, it will have a projected portfolio of 25-30 sustainable companies in its portfolio, drawn from around the world.

The investment trust’s portfolio will be managed by Peter Michaels, Simon Clements and Chris Foster, who are all part of the Liontrust sustainable investment team. The trust will be managed in the same way as Liontrust’s existing range of Sustainable Future funds. This identifies companies “helping to create a cleaner, safer and healthier world.” Current trends that the trust will focus on include better resource efficiency, greater safety and resilience, and improved health.

Why launch an ESG-focused investment trust?

Liontrust says it believes that well-run companies with sustainable business models, that aim to make a positive impact on the planet and society, and can generate strong returns for investors. ESGT will have a concentrated portfolio that only holds companies with the highest sustainability scores, as determined by the Liontrust sustainable investment team.

Liontrust has said that it has noted rising demand among investors for sustainable investment strategies. Research in Finance carried out a study for the fund manager which found 78% of wealth managers and 71% of financial advisers in the UK are seeing an increasing proportion of their clients investing sustainably over the past year. When you compare that with intelligence on massive flows into ESG-focused ETFs, as reported by TrackInsight’s ESG Observatory, and it becomes clear there is a massive trend underway on the part of investors large and small.

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The universe of specialist investment trusts in the broadly defined ESG space remains fairly small, according to data from the Association of Investment Companies. For example, AIC tracks only three trusts in its Environmental universe, including Impax Environmental Markets (LSE:IEM) and Jupiter Green (LSE:JGC). Both the Jupiter and Impax investment trusts have respectable track records in place, with Impax putting in a punchy average gain of 32% pa (+41% in the last 12 months).

So what is a sustainable company in the Liontrust lexicon?

Liontrust sees sustainable companies as ones that help drive the key structural growth trends that will shape the sustainable global economy of the future, provide or produce sustainable products and services, and have a progressive approach to the management of environmental, social and governance issues.

“This new investment trust is a welcome addition to the burgeoning number of Responsible Investment funds,” said John Fleetwood of Square Mile Research. “Most significantly, it allows the fund manager to invest in smaller companies that have the greatest growth potential. Furthermore, up to 10 per cent of the management fee will be used to fund research to identify and develop financial instruments covering those UN Sustainable Development Goals that are currently uninvestable. The fund builds on the huge success of Liontrust’s open-ended funds and complements the existing range.”

Liontrust said up to 10% of the 0.65% management fee will be donated to research on and development of financial instruments that cover the UN Sustainable Development Goals that are still difficult to focus on from an investment point of view. These include the more neglected areas like zero hunger and life below water.

ESGT’s total ongoing fee to investors will be 1.07%. This is prior to any investment platform fees that will be added on top.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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