The Economic Advantage Process | What we offer | Liontrust Asset Management PLC
Liontrust - Economic Advantage

The Economic Advantage process

Anthony Cross, Julian Fosh, Victoria Stevens, Matt Tonge & Alex Wedge

Investment philosophy

A fundamental principle of competitive markets is that profits regress to the mean. The fund managers believe  the secret to successful investing is to identify those few companies that have a durable Economic Advantage which allows them to defy this principle and sustain a higher than average level of profitability for longer than expected. This surprises the market and can lead to strong share price appreciation.

Economic Advantage is the collection of distinctive characteristics of a company that competitors struggle to reproduce even if those competitors have understood the benefits arising from those characteristics.

In the fund managers’ experience, the hardest to replicate characteristics fall into the following three categories of intangible assets:

  1. 1

    Intellectual property

  2. 2

    Strong distribution channels

  3. 3

    Significant recurring business

Other less powerful but nonetheless important intangible strengths include franchises and licenses; good customer databases and relationships; effective procedures and formats; strong brands and company culture. These intangible assets produce barriers to competition, protect margins and are capable, in the opinion of the fund managers, of reaping a financial advantage in the form of cash flow returns in excess of the cost of capital. A company that consistently generates excess cash flow returns will benefit from compounding as it reinvests this excess return into the business.

Investment process

The fund managers evaluate companies in the UK stock market for their possession of durable Economic Advantage. Companies must possess at least one of the main advantages: intellectual property, strong distribution or recurring business (at least 70% of annual turnover).

Strict risk scoring of companies determines stock weightings within the portfolios. Each company is graded against eight criteria: financial risk (balance sheet and accounting risk, capital requirements and financial gearing), product dependency, customer dependency, pricing risk, regulatory change, licence dependency, acquisition risk and valuation.

Every smaller company held in the Economic Advantage funds has at least 3% of its equity held by senior management and main board directors. Companies are also assessed for employee ownership below the senior management and board and changes in equity ownership are monitored.

The Economic Advantage team
The Economic Advantage team
 Anthony Cross (centre-left), Julian Fosh (centre-right), Victoria Stevens (right), Matt Tonge (left) and Alex Wedge (not pictured)

Anthony Cross has managed the Liontrust Special Situations and UK Smaller Companies Funds since launch and he started working with Julian Fosh at Liontrust in 2008. Julian has previously managed money at Scottish Amicable Investment Managers, Britannic Investment Managers, Scottish Friendly Assurance Society and Saracen Fund Managers. Victoria Stevens and Matt Tonge joined the team in 2015 to research and analyse investment opportunities primarily across the small cap universe. Alex Wedge joined the team in March 2020 from N+1 Singer.

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Success stories in the UK micro cap space

Victoria Stevens

Since its launch 5 years ago, a number of stocks... Read more


Awards and ratings

Citywire - Fund Manager rated AA
Anthony Cross & Julian Fosh
Citywire Manager rating: AA
Citywire rated AAA
Victoria Stevens & Matt Tonge
Citywire Manager rating: AAA
FE Alpha Manager 2018 - Anthony Cross
Anthony Cross
FE Alpha Manager 2020
FE Alpha Manager 2018 - Julian Fosh
Julian Fosh
FE Alpha Manager 2020
Morningstar OBSR - Bronze
Liontrust GF Special Situations Fund
Morningstar Analyst Rating: Bronze
FT Adviser 100 Club Awards 2019
FT Adviser 100 Club Awards 2020
UK Smaller Companies Fund of the Year
Liontrust UK Smaller Companies Fund
FT Adviser 100 Club Awards 2019
FT Adviser 100 Club Awards 2019
UK Smaller Companies Fund of the Year
Liontrust UK Smaller Companies Fund

Latest fund updates

The Economic Advantage team

Read the latest fund updates from the Economic Advantage team.
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AJ Bell 2020 UK Equity Special Situations 100x100
AJ Bell Fund & IT Awards 2020
UK Equity – Active
Liontrust Special Situations Fund
FE Fundinfo Alpha Manager of the year 2020
FE fundinfo AM Awards 2020
Alpha Managers of the Year
Anthony Cross & Julian Fosh
FE Fundinfo Best Alpha Manager, UK Equities
FE fundinfo AM Awards 2020
UK Equities Managers of the Year
Anthony Cross & Julian Fosh
Morningstar Awards 2019
Morningstar Awards 2019
Best UK Equity Fund
Liontrust Special Situations Fund
AJ Bell Fund & Investment Trust Awards 2018
AJ Bell Fund & IT Awards 2018
UK Equity - Active
Liontrust Special Situations Fund

Key Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the  GF UK Growth Fund may differ from the performance of the  UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.


The information and opinions provided 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.  Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.


Citywire information is proprietary and confidential to Citywire Financial Publishers Ltd ('Citywire'), may not be copied and Citywire excludes any liability arising out of its use. © 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.  Past performance is no guarantee of future results.

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