Liontrust has acquired Alliance Trust Investments (ATI) in a move that will boost its assets under management by around £2.3bn to more than £8bn.
Due to complete in April 2017, Liontrust will purchase the entire issues share capital of ATU for £30m. The acquisition will see head of the ATI investment team Peter Michaelis and the 11 sustainable investment funds join Liontrust.
John Ions, chief executive of Liontrust, says: “The team brings with it a broad range of existing equity and fixed income funds and a long-term track record: Peter was at Aviva Investors, including as head of sustainable and responsible investment, for 11 years before moving to ATI in August 2012.
“There is strong demand for sustainable investment in the UK and internationally. Increasingly, consumers expect the companies they use to be socially responsible and the demand for sustainable investment will only grow with the rise of millennials. The acquisition of ATI puts us in a very strong position to meet this demand.”
Michaelis adds: “We have been attracted to Liontrust by the culture of the company and the environment the company provides for fund managers. We will continue to focus on running money according to our own investment process.”
The sale is a result of a group strategic review by Alliance Trust, which will also see the global equity investment adopting a multi-manager approach and doubling its target to outperform the MSCI All Country World index from 1 per cent to 2 per cent per annum net of costs over rolling three-year periods.
Lord Smith of Kelvin, chairman of Alliance Trust, says: “Since May, the board has evaluated carefully a broad range of options, with an open mind and a clear line of sight on how best we could improve the Trust’s performance.
“Our proposal is that we will move from a single manager to multiple equity managers. All managers will be rated best-in-class and each will create a focused portfolio of their best investment selections. We are confident that this exciting and differentiated investment approach will help to improve Alliance Trust’s performance on a consistent basis.”
Richard Troue, head of investment analysis at Hargreaves Lansdown, says he will be keeping an eye on performance.
‘This is the latest in a raft of changes to Alliance Trust in recent years. On balance it is encouraging to see the board take further steps to improve performance, but it is a shame it has taken so long to get this far. As always, the proof of the pudding will be in the eating and the success of the strategic review will be measured by the trust’s performance in the coming years.
“Change always brings with it disruption, so investors comfortable with the outcome of the strategic review should be willing to take a long-term view in order to benefit fully from the changes. The trust’s future success will hinge not only on the ability of the underlying managers to pick good stocks, but also the ability of Willis Towers Watson to blend complementary managers into a single portfolio. There is currently limited information on their process and track record available to Alliance Trust investors.”
“Liontrust will provide the team and investors with long-term stability. We have also been impressed by the strength of Liontrust’s brand profile and its distribution capability. This is a very important consideration for us as we look to raise the profile of the team and the funds we manage.
“It is a good time to make the move to Liontrust because of the opportunities that the UK retail, institutional and European markets offer sustainable investment funds.”