fund

Rated

This is one of our rated funds. They’re the ones our experts believe will do well for investors over the longer term. Top of the class!

Liontrust Monthly Income Bond B Gross

An actively managed quality bond fund which incorporates sustainability screening.

  • 100.41p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 174.28p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.50%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.62%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 4.50%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 01 March 2021, fund data last updated 12 November 2019

The fund aims to produce an attractive total return profile and monthly income yield via a core portfolio of predominantly sterling investment grade corporate bonds that meet Liontrust’s environmental and social criteria.The fund can also invest in government bonds, non-sterling investment grade corporate bonds, sub-investment grade bonds, and the management team will actively manage interest rate and other portfolio risks via derivatives.

Fund summary

Sector £ Corporate Bond
Structure OEIC
Launched November, 2010
Size £508m
Yield 4.50%
Charging basis Income
Dividends paid Last day of each month

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.50%
Ongoing charges figure 0.62%

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Investment process

The investment process has two key stages; identifying superior bonds; constructing resilient portfolios and controlling risk. The process is a combination of top down (interest rate and credit beta) and bottom up (sector, credit quality, subordination). Top down - quarterly strategy meetings determine long-term positioning. Weekly meetings are designed to implement and review positioning. Daily meetings to review market data & news. The key decision-marker in this regard is head of the desk, Stuart Steven, and this work features strongly in the asset allocation, interest rate positioning and credit rating exposure they seek when “identifying superior bonds”. The bottom up process starts at idea generation (value screen, new issues) from a universe of 500 issuers. The fund managers then combine fundamental credit analysis (company’s ability to pay debt/ default risk, management team track record etc) with in-depth analysis of issuer specific factors, including ESG and macro-economic analysis. The process incorporates Liontrust's established sustainability matrix, which scores companies based on the quality of its management (1-5, 5 being worst) and the sustainability of its products/services (A-E, E being worst). In this fund issuers must score D3 or higher to be considered for portfolio inclusion but it has a weighted average score of B2. Individual bonds are then analysed alongside asymmetric risks, before the team seek to value the bond on both an absolute and relative basis. Portfolio construction reflects stock selection, the managers’ long-term views of markets, and hedging strategies will be used, as appropriate, to reduce downside risk (interest rate positioning, cross-market & curve positions, volatility). From the available buy recommendations identified in stage 1, the team select the best combination of 50 to 100 bonds for inclusion in a focused portfolio that is constructed to safeguard against sustained downside risk.

We believe that this fund offers an attractive income and risk profile. This is a high conviction approach to credit investing, which provides the experienced management team much more flexibility than most of their peer group to actively manage the fund. Portfolio construction incorporates both bottom-up issuer selection and top-down macro positioning, with the bottom-up criteria including Liontrust's sustainability matrix, which scores companies based on the quality of their management and the sustainability of their products/services.

Manager research

Average monthly relative returns

  • 16/17 0.02%
  • 17/18 0.20%
  • 18/19 -0.22%
  • 19/20 -0.15%
  • 20/21 -0.06%

Bestinvest MRI

  • 3 years -0.14%
  • 5 years -0.04%
  • Career -0.11%
  • 3 years 20.10%
  • 5 years 49.60%
  • Career 27.10%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Stuart Steven/ Aitken Ross/ Kenny Watson

Stuart Steven is a co-fund manager of the Liontrust Monthly Income Bond Fund, having joined Alliance Trust Investments in December 2009 before it was acquired by Liontrust. Steven joined Britannic Asset Management in 1994 and became Head of Corporate Bonds with responsibility for managing investment grade portfolios for retail and institutional funds. In 2000 he joined Legal & General as Director, Corporate Bonds where, until 2006, he managed a team of credit specialists managing multi-currency assets. He joined Scottish Widows Investment Partnership in 2008 as Investment Director, managing a number of funds, including investment grade and & absolute return funds. Aitken Ross was promoted to Co-Fund Manager of the Liontrust Monthly Income Bond Fund in March 2014. Ross joined the Alliance Trust graduate programme in 2010 after graduating from Dundee University with a First in Accountancy and Finance and subsequently completing an MA in International Financial Analysis at Newcastle University. He is also a CFA charterholder Kenny Watson was appointed a Co-Fund Manager of the Liontrust Monthly Income Bond Fund in April 2015. He joined Alliance Trust in 2013 from Ignis Asset Management where he worked for 15 years. Watson started his career at KPMG, after qualifying as a chartered accountant, before joining Murray Johnstone as a trainee fund manager in UK equities in 1994. He has a BA in Accounting & Economics from the University of Strathclyde, is a chartered accountant and is an Associate of the UK Society of Investment Professionals.

Track record

Stuart Steven/ Aitken Ross/ Kenny Watson has 8.1 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.11%. During the worst period of relative performance (from January 2013 - August 2016) there was a decline of 13% relative to the index. The worst absolute loss has been 10%.

Periods of worst performance

Absolute -10.00% (January 2020 - March 2020)
Relative -13.00% (January 2013 - August 2016)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Top 10 holdings

Data accurate as at 31 July 2020

4.6348% Hm Treasury United Kingdom Dmo 8% Gilt 2021
3.2128% Cooperatieve Cent Rffisen Ba/Nl 4.625% Bds 23/05/29 Gbp100000
3.1922% Standard Chartered 5.125% Dtd Subord Nts 06/06/34 Gbp100000
2.7608% Orange Sa 8.125% Bds 20/11/28 Gbp1000
2.725% Verizon Communications Inc
2.6606% Hsbc Hldgs 7% Subord Nts 07/04/38 Gbp50000
2.6224% Natwest Group Plc Fxd To Fxd Rt Rst Nts 14/08/30 Gbp T2
2.5548% Hbos Capital Funding 6.85% Perp Bds Usd1000
2.5422% British Telecommunications 9.875% Nts 15/12/30 Usd1000
2.522% Vodafone Group 5.90% Eur Med Trm Nts 26/11/32 Gbp(Var)
Source: Trustnet

Sector breakdown

Banks 24.00%
Insurance 18.00%
Telecommunications 16.00%
Utilities 15.00%
Real Estate 6.00%
Financial Services 5.00%
Government Bonds 5.00%
Mortgage & Secured Bonds 3.00%
Money Market 3.00%
Property 2.00%

Portfolio

62 issuers currently. They quote an average credit rating of A, but this is BBB when you strip out the derivatives.

Constraints

Minimum 80% AAA-BBB. Max financials 50%. Max high yield 15%. Max exposure to CoCo/ AT1 Bonds 7%. Max 20% government bonds, but unlikely to ever be over 10%. No Index Linked, unrated bonds or physical overseas bonds, but will trade UK, US, EU bond futures.

Key Investor Information - Income

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Key Investor Information - Accumulation

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