Liontrust: Withdrawals accelerate as performance deteriorates
Investor withdrawals from Liontrust ramped up in the last quarter, with customers pulling £1.3bn and the asset manager losing £700m on poor market movements.
Liontrust’s assets under management and advice fell 8.1 per cent to just £22.6bn across the first three months of the year, the firm revealed in a trading update today.
Since the figures ran to 31 March, the firm also stated that its assets had dropped by a further £1bn in the first 10 days of April, falling further below analyst expectations.
Liontrust experienced both investor withdrawals and negative market performance across every arm of its business except its alternative funds, which saw £78m of inflows across the quarter.
“There has been no change in the prevailing trends, with the business seeing further outflows and the impact being compounded by negative investment returns,” said Peel Hunt analysts Stuart Duncan and Stephen Payne.
Liontrust has struggled to keep investor cash due in part to its focus on sustainable investing, which has fallen out of favour with markets in recent years.
Duncan and Payne added they expected “material downgrades” to profit expectations for this financial year as a result of the poor results.
Investec analysts have downgraded their earnings per share estimates 19 per cent as a result of the poor results, and cut Liontrust’s stock price target from 602p to 552p.
“We are mindful of the uncovered dividend expectations,” added Investec analyst Jens Ehrenberg.
The issue of Liontrust’s dividend has been echoed by other analysts, with RBC stating the the firm was “increasingly at risk” of having to slash its payouts earlier this month.
“The dividend looks increasingly at risk, as we forecast surplus capital to fall from £46m at the first half of 2025 to just £5m by the end of 2025,” said RBC analyst Mandeep Jagpal.
In the trading update, Liontrust also provided an update on its cost-cutting programme, which was launched at the end of last year to save around £4.5m annually.
However, the firm said today that the programme was “mostly complete,” with savings expected to come to around £6m a year.
“It feels that over the past few years, the only certainty has been uncertainty,” said Liontrust CEO John Ions.
“The current day-to-day unpredictability and fluctuations in markets reinforces our belief in active management and the long-term power of robust and repeatable investment processes.”