Sustainable investment specialist Liontrust has announced its intention to launch its first investment trust, with an initial public offering (IPO) expected in early July.
The Liontrust ESG Trust (ESGT) will invest in 25 to 35 companies around the world that it deems to be sustainable over the long term, mostly in developed markets.
Why an investment trust?
Investment trusts allow you to pool your money with that of other investors to access a range of assets through a single investment. They are set up as companies and traded on the London Stock Exchange.
ESGT’s portfolio will be managed by Peter Michaelis, Simon Clements and Chris Foster, who are currently part of the firm’s Sustainable Investment team.
It will be managed using Liontrust’s ‘sustainable future’ investment process, which identifies companies “helping to create a cleaner, safer and healthier world”. Current trends in this sector that the trust will focus on include better resource efficiency, greater safety and resilience, and improved health.
Rising demand for sustainable investing
The launch comes as investors increasingly look to do good with their money while also aiming for a profit. According to a recent study by Research in Finance, on behalf of Liontrust, three quarters (75 per cent) of consumers now consider sustainability to be an important part of their everyday life.
Of those who do not invest sustainably, 80 per cent said they were aware of sustainable investment, showing the huge potential for growth. The figures also revealed that 78 per cent of wealth managers and 71 per cent of financial advisors have seen an “increasing proportion” of their clients investing sustainably over the past year.
ESGT is “closed-end”, which means it will raise a set amount of capital only once, through an IPO of a fixed number of shares. When all the shares have sold, the offering is “closed” – hence, the name. Liontrust says this structure enables a wider range of investors to access its expertise.
ESGT is looking to raise £150 million, with a closing date of June 29.
The permanency of capital within the trust means that portfolio managers aren’t held back by market cap (the total value of all outstanding shares in a company) when picking investments – ie. they don’t need to be as concerned about short-term volatility.
By having a longer-time horizon than most, the managers can invest in businesses they believe have years of growth ahead and take advantage of dips in the market when they are trading below their perceived long-term worth.
UN Sustainable Development Goals that are hard to invest in
Up to 10 per cent of the management fee that Liontrust receives from the trust will be used to fund research to identify and develop financial instruments covering those UN Sustainable Development Goals (SDGs) that are currently “un-investable”. These include ‘no poverty’, ‘zero hunger’, ‘life below water’, and ‘life on land’.
For more information on ESGT and sustainable investing, visit www.liontrust.co.uk/esgt