MPS Dynamic Passive Portfolios | Liontrust Asset Management PLC

About the MA MPS Dynamic Passive Portfolios

The Liontrust Multi-Asset MPS Dynamic Passive portfolio range is designed to target the outcome expected by investors in terms of their level of risk, as measured by volatility, and maximise the return for each portfolio within the appropriate risk band.

While the underlying holdings are passive securities and vehicles, we actively manage the Liontrust MA MPS Dynamic Passive portfolio range.

This includes through the ability to select different passive investments from across the market and change them when appropriate, as well as alter the tactical asset allocation on a quarterly basis to reflect our changing views on the relative value of asset classes and the economic and investment markets’ environment.

This flexibility results in amended weightings of and changes in the selection of passive investments within the portfolios including asset classes and geographical weightings.

Therefore, the Liontrust MA MPS Dynamic Passive portfolio range differs from other passive offerings by being actively managed while providing broad diversification. Each of portfolios within the range provide diversification across a range of different underlying providers, geographical regions and asset classes.

The higher the risk of the portfolio within the range, the greater the potential for volatility, positive returns on the upside and losses in down markets.

Clients can stay invested in the service through the accumulation and decumulation phases of their lives as their risk profile changes.

Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

Key literature

Liontrust MA Performance Review & Outlook

Reasons to invest

Experience: One of the most experienced and highly regarded multi-asset multi-manager investment teams in the UK market, headed by John Husselbee
Diversification: Each portfolio provides diversification across a range of different funds, fund managers, geographical regions and asset classes
Long-term flexibility: Investors can switch between the range of portfolios as their risk profile and objectives change during the accumulation and decumulation phases of their lives
Rigorous process: The investment process is designed to deliver the outcome expected by investors and aims to generate maximum returns for each target risk portfolio within the pre-determined volatility ranges
Added value: We seek to add value through each of strategic and quarterly asset allocation, fund selection and portfolio construction
Costs: We aim to keep costs to a minimum and are often able to invest in underlying funds on better terms than those commonly available

Our Investment Process

Strategic asset allocation Among the factors they analyse, the fund managers collate and study historical returns and volatilities of a range of asset classes, as well as their correlations with each other, and the pathway of future interest rates to determine the SAA that should meet the volatility target of the fund or portfolio over the long-term. The SAA is essentially the default asset allocation should the fund managers have no views about the relative attractiveness of different asset classes.

Tactical asset allocation The primary aim of the tactical asset allocation (TAA) is to increase exposure to an asset class when it looks cheap and reduce exposure when it appears expensive; the fund managers’ focus is on valuations rather than market timing. They believe it is important to supplement the long-term benefits of the SAA with the flexibility to take advantage of valuation opportunities in the shorter term.

Fund selection We hold a range of funds and fund managers, including active, passive and alternative investment strategies. The fund managers believe the key elements that should underpin fund selection are: investment process, fund manager experience, fund manager knowledge and fund manager incentive (including remuneration).

Portfolio construction The fund managers want to ensure the underlying funds are exposed to the segment of the market they feel has the most potential for outperformance while reducing unintended risk. Therefore, they consider how each holding interacts with each other in terms of correlation, risk and return to ensure the benefits identified at the holding and sector levels are not diversified away when grouped together at the fund level.

Monitoring, review and risk management The Liontrust Multi-Asset team is given regular updates, including in-depth data, on the underlying funds to ensure they are being managed according to their stated objectives and investment processes. This includes attribution analysis to show the underlying funds do not experience style drift and remain within their stated risk parameters. We gain access to the underlying fund managers to probe their thinking and evaluate their continued commitment.

As the Portfolio is targeting the volatility expected by investors, then there will be short-term periods when the Portfolio may underperform relative to the market and other portfolios, especially those seeking to generate capital growth without a volatility target. The Portfolio typically performs well on a relative basis when diversification is rewarded by markets.

A range of portfolios for different risk profiles

Fund insights

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Meet the team

Headed by John Husselbee since joining Liontrust in 2013, the team comprises of three investment managers and a fund analyst. Deputy Head James Klempster joined from Momentum Global Investment Management, Anthony Chemla joined from atomos (previously Sanlam Investments) and David Salisbury joined from 4 Shires Asset Management.

View team

"A key objective in terms of performance is to strive to 'win over the long term by not losing.' We aim to achieve this by seeking to manage risk and limit losses in falling markets to enhance long-term returns in each risk target."

Key Risks

Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.

Some of the Funds and Model Portfolios managed by the Multi-Asset Team have exposure to foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The majority of the Funds and Model Portfolios invest in Fixed Income securities indirectly through collective investment schemes. The value of fixed income securities will fall if the issuer is unable to repay its debt or has its credit rating reduced. Generally, the higher the perceived credit risk of the issuer, the higher the rate of interest. Bond markets may be subject to reduced liquidity. Some Funds may have exposure to property via collective investment schemes. Property funds may be more difficult to value objectively so may be incorrectly priced, and may at times be harder to sell. This could lead to reduced liquidity in the Fund. Some Funds and Model Portfolios also invest in non-mainstream (alternative) assets indirectly through collective investment schemes. During periods of stressed market conditions non-mainstream (alternative) assets may be difficult to sell at a fair price, which may cause prices to fluctuate more sharply.

Disclaimer

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.

This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust.