Liontrust Sust Future Cautious Managed 2 Inc

Asset Manager Overview

Liontrust is an independent asset manager that was launched in 1995 and listed on the London Stock Exchange in 1999. It has several investment teams within the business, offering equity, fixed income, and multi-asset strategies to clients. All of the investment teams operate largely independently of each other and are free to follow their own investment process and philosophy. As at 31st December 2025 it had c.£21bn in assets under management.

Fund Manager/Team Overview

This fund is co-managed by Peter Michaelis, Simon Clements, and Chris Foster who are part of the sustainable investment team. They are supported by the 15 other team members. Mr Michaelis is head of the sustainable fund's team and has 20 years of experience managing sustainable strategies. Mr Clements is co-manager and is jointly responsible for asset allocation and stock selection on the equity portfolio. Mr Foster was recently appointed as a co-manager on the strategy.

Investment Philosophy & Process Overview

The team's sustainable investment process is based on a core belief that sustainable businesses can provide better growth and are more resilient than the market gives them credit for. They use this belief to frame their investment process and look to deliver outperformance across the equity and bond portions of the portfolio. By investing in sustainable companies, they also believe they help to accelerate environmental and social improvements.

The team looks to invest in the economy of the future favouring companies proactively managing their own interactions with society and the environment. The team has identified 22 sustainable themes, linked to better resource efficiency, improved health, and greater safety and resilience, that they feel are contributing in different ways to creating a cleaner, healthier, and safer planet. Each of the companies they own has to fit into one of these themes. They want to own companies with leading processes in place to manage the issues key to their business; this will clearly depend on the industry in question but it includes areas such as customer relationships, employee satisfaction and retention, and supply chains, as well as energy efficiency, waste reduction and material recycling.

The fund will invest directly in a mixture of global equities, fixed income securities and cash, such that it retains a level of risk consistent with Dynamic Planner risk profile 5. The managers will invest between 40-60% of the portfolio in equities and historically this has been towards the top end of this range. The fund will hold around a quarter in UK and three quarters in overseas equity markets but this will be actively managed, as will the fund's exposure to each asset class. The team's sustainable approach generally leads them towards small to medium sized companies which have the potential to provide a high level of growth. The fund's equity portfolio therefore tends to offer a higher potential return than investing in more established companies, however this can lead to it exhibiting a higher level of risk. The fixed income portfolio will invest in both government and corporate debt, however the fund is likely to retain a bias to the latter. The managers generally do not actively manage the fund's currency exposure and this will be a function of the underlying securities held so will retain a sterling bias.

ESG Integration

Asset Manager ESG Integration

Liontrust has been a signatory of the UN Principles for Responsible Investment (PRI) since 2018 and was awarded a score of 4 (out of 5) for sustainability integration, stewardship and company culture at its latest assessment. In early 2025, the Responsible Capitalism team was integrated into the newly formed Product, Stewardship and Governance (PSG) team. The PSG team now holds responsibilities for stewardship, engagement and governance activites. At Liontrust, ESG integration and stewardship are primarily embedded within individual investment teams, with support from the centralised PSG team. Given that each of the group's underlying investment teams is free to pursue its own investment approach, PSG team's role is to provide support and guidance and not to dictate how each team should incorporate ESG factors into its processes. There is an ESG framework in place, as well as the availability of data and tools such as MSCI ESG, but on the basis that the individual teams are accountable for their own processes, the use of these is not compulsory. Voting is undertaken at the group level; however, each of Liontrust's investment team has the right and responsibility to override the Group's proxy voting advisor. Within Liontrust, the Sustainable Future (SF) strategy adopts a more active approach, with full integration of sustainable investment considerations. The achievement of the FCA's SDR Sustainability Focus label for all ten of the UK-domiciled funds under SF strategy is a notable endorsement of its efforts. However,  we believe there remains scope for further improvement across the wider business. Liontrust has made further acquisitions over the past few years and continues to incorporate these teams into the broader business. As this progresses, it should allow ESG integration and responsible practices to permeate more widely.

In addition to the UN PRI, the firm is also a signatory to a number of other initiatives, including the NZAMi (Net Zero Asset Managers' initiative), the UKSIF (UK Sustainable Investment and Finance Association). Liontrust's near-term science-based emissions reduction targets has also been approved by SBTi in 2023.

Fund ESG Integration

This fund has ESG analysis fully integrated into the team's investment process, indeed the fund has a sustainability linked investment policy. The assessment of financial and non-financial analysis is seen as equally important and companies that meet their high hurdle are considered using both factors. The sustainable team's approach looks to invest in the "economy of the future" and the team has identified 22 sustainable themes, linked to better resource efficiency, improved health, and greater safety and resilience, that they feel are contributing in different ways to creating a cleaner, healthier and safer planet. They use these themes to highlight companies on the right side of the transition to a more sustainable world. However, the focus on positive trends also naturally excludes areas they believe are harming the planet or its people, for example, fossil fuels, tobacco, arms, and gambling. The team is committed to transparency of their holdings, constantly challenges one another, and also seeks external guidance in the form of an independent external Advisory Committee to challenge and develop their thinking.

For each company, that is deemed to be potentially investible for the fund, the team will determine what the key environmental, social, and governance (ESG) factors are and how important they are likely to be in its future success. And significantly, how well these are managed. This is done using their proprietary sustainability matrix which gives each company a score based on its product and services as well as its management quality. This scoring system ensures that the Sustainable Future funds will not invest in any company that is not linked to one of their key themes or poorly manages ESG risks. The team believes that good company management is instrumental in avoiding issues where company tail risks may be underpriced. The team actively engages with companies they own and encourages better business practices.

Responsible Investing Approach

The team's primary focus is on finding companies positively exposed to long-term transformative themes. However, they also want to avoid or limit their investment in companies exposed to activities that cause damage to society and the environment. These restrictions include; the areas of alcohol production or distribution, animal welfare, climate change, deforestation, gambling, genetic engineering, human rights, infrastructure projects, intensive farming, labour standards, nuclear, ozone-depleting substances, pornography, tobacco, and weapons systems

The managers will only invest in companies that are linked to one or a number of their 22 sustainable themes. Currently, these themes include; improving the efficiency of energy use, improving industrial and agricultural processes, increasing waste treatment and recycling, improving the management of water, making transport more efficient, increasing electricity from renewable sources, enabling innovation in healthcare, connecting people, providing affordable healthcare, providing education, enabling healthier lifestyles, building better cities, delivering healthier food, increasing financial resilience, insuring a sustainable economy, saving for the future, enhancing digital security, leading management, better monitoring of supply chains and quality control, and improving auto safety.

Risk Summary

This fund has been awarded a Square Mile Responsible rating as it seeks to achieve its investment objective through investment in securities that provide or produce sustainable products and services as well as having a progressive approach to the management of ESG issues. Investors should be aware that investing in a responsible manner can be a very subjective issue and may be defined very differently by investors. It is therefore important that investors are aware of the fund managers' sustainable investment approach to ensure it is not misaligned with their own sustainable preferences.

This fund invests in a balance of global equities and bonds and so investors will have exposure to a number of different risks but dominant factors are likely to be equity, interest rates, credit and to a less extent exchanges rates.

This fund is specifically designed to remain within Dynamic Planner risk profile 5 and the managers actively manage the portfolio's risk to ensure it remains aligned.

Compared to many peers which target a similar risk profile, the fund has exhibited a higher level of volatility but has at times rewarded investors with a higher return. This higher volatility compared to peers is driven by its sustainable approach, which tends to lead the managers into more niche areas of the market and away from mega-cap stocks, and the fund's directly invested approach compared to those that follow a multi-manager approach which is more diversified on a look through stock basis. That said, its approach inherently mitigates many of risks associated with ESG issues.

Additional Information

(3 years data to last month end unless otherwise stated)

Qualitative Risk Assessment

	Significant	Potentially Significant	Not Significant
Equity Risk
Interest Rate Risk
Credit Risk
Exchange Rate Risk
Liquidity Risk
Emerging Markets Risk
Derivative Risk
Manager Risk
Gearing Risk
Discount/Premium Risk

For the full summary of the risks, click here

3 Year Rolling Sector Outperformance

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 12th March 2026. Share price total return.

Maximum Drawdown (Rolling 12 Months)

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 12th March 2026

Calendar Year Performance To Quarter End

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 30th March 2026

Value for Money

The fund's OCF is lower than the median fund within its peer group and its transaction charges are lower than most of its peers. This translates into a total cost of investment (TCI) which is below the median relative to its peers. We believe this fund offers value for money when you consider the strength and resources of the investment team and the strong track record of the strategy since launch. However, we acknowledge the near term underperformance which has largely been driven by its investment approach.

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 31st January 2026.

Rating Changes

The Square Mile ratings are reviewed every 6 months. For full details on the methodologies, click here.
For a full list of all Square Mile rated funds, click here.