Liontrust Asset Management reported full-year net outflows of £4.2 billion for the 12 months to March 31, a significant slowdown from the £5.3 billion recorded in the prior year. The improvement reflects a gradual stabilization in market conditions and a tentative recovery in investor confidence, according to the firm's trading update released on Wednesday.
Outflows decelerate amid market recovery
The outflows were concentrated in the first half of the financial year, with the second half seeing a marked reduction as equity markets rebounded and interest rate expectations stabilized. Liontrust's assets under management stood at £27.8 billion at the end of March, down from £28.5 billion a year earlier, but up from £26.1 billion at the halfway point.
Chief Executive John Ions said: "We are encouraged by the improving trends in flows and market sentiment. While the macroeconomic environment remains uncertain, we are seeing early signs of renewed interest in our investment strategies." The firm noted that positive investment performance contributed to the asset recovery, offsetting some of the outflows.
Performance and strategy
Liontrust's flagship Sustainable Future and UK equity funds experienced the bulk of the redemptions, but the pace slowed in the latter part of the year. The company has been focusing on expanding its distribution channels and product range to attract new mandates. In particular, Liontrust has been strengthening its presence in continental Europe and Asia, where it sees long-term growth opportunities.
The firm's profitability remained under pressure, with operating profit falling 12% to £68 million, partly due to higher staff costs and investment in technology. However, cost-cutting measures implemented in the second half helped mitigate the impact. Liontrust maintained its dividend at 55 pence per share, reflecting confidence in its financial position.
Outlook and industry context
Looking ahead, Liontrust expects market conditions to remain challenging in the short term, but management expressed optimism about the long-term demand for active management, particularly in sustainable investing. The firm's net flows have turned positive in April, with inflows of £200 million, suggesting a potential inflection point.
The broader asset management industry has faced headwinds from higher interest rates and geopolitical uncertainty, leading to widespread outflows from active funds. However, recent data from the Investment Association shows that UK fund flows turned positive in the first quarter of 2024, indicating a possible recovery. Liontrust's performance relative to peers has been mixed, with its focus on UK equities and sustainability differentiating it from competitors.
