5 Minutes With: Liontrust's Peter Michaelis

This week we speak to Peter Michaelis, manager of the £1 billion Liontrust Sustainable Future fund, about stargazing and why ESG investing is just common sense 

Annalisa Esposito 2 August, 2019 | 9:16AM
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Peter Michaelis

Peter Michaelis, 50, has managed the £1bn Liontrust Sustainable Future fund since its inception in 2001. With around a third of its assets in the UK and another third in the US, around 19% of the portfolio is in financial services firms such as Visa and Paypal. The fund has returned 71% over the past five years, almost double the average return from funds in the Mixed Investment 40-85% Shares sector.

What does the fund do?

Deliver long-term growth by investing in sustainable companies, be that through company shares, debt or bonds. Our investors care about how much money they make but they also care about how their money is invested. We want to invest in businesses that can demonstrate they are doing good for people and the planet. 

Why a sustainable fund?

It wouldn’t interest me to run a fund that wasn’t sustainable. I did a PHD in Environmental Economics, so I’ve always been interested in environmental matters. But I’m also trying to understand how businesses can help to improve our environment while being successful. For me, this has always been common sense.

There’s an investment logic to it too, though. If you look at how people spend their money – whether it’s on the holidays they take, food they eat, or clothes they buy – they care about their provenance and the impact they are having. 

What stock are you currently excited about in the portfolio?

I like healthcare company IQVIA (IQV), which is involved in organising medical trials and monitoring how successful treatments are, in a more efficient way. If you look at the US, around 20% of GDP is healthcare costs; any company helping to make the sector more efficient is going to be very successful. 

What’s your best ever investment?

Kingspan (KGP), an Irish firm that installs insulation products for buildings. It’s a fantastic product because it improves the energy efficiency of buildings and it’s been a phenomenally successful company, growing by around 17% a year over the past 24 years. It’s the perfect company for us: one having a positive impact and delivering fantastic returns.

And the worst?

Investing is often about trying to predict the future and frequently the future doesn’t turn out the way we expect. We invested in a Brazilian educational company called Kroton – it provides private education and if you get a qualification from there you will likely get a better paid and more fulfilling job. Unfortunately, political interference meant that the all market changed and the stock fell about 45% in the time we held it.

What’s the stock you didn’t buy that you wish you had?

Tesla (TSLA). In 2012 its shares were less than $1 – today they are $256. If we could have foreseen how successful the company would be, that would have been fantastic. The company makes an impact in one of the biggest environmental problems there is – transport – and in a way that delivers excellent returns. Still, we have to remember there were good reasons why we didn’t invest in Tesla, such as corporate governance-related issues. 

What’s the most important lesson you’ve learned?

Patience and conviction. Patience to give companies the time to deliver, and the conviction to stick to your process. 

What do you do in your spare time?

I have a family and kids, but the one I really like doing for myself is stargazing. Astronomy is something my father taught me, and I continue to love it. It takes you out of this world.

If I weren’t a fund manager…

I am still waiting for my next career as an astronaut. More likely it would be something around teaching or science. 

What’s the best thing about this industry?

This ability to make a difference. To show that sustainable investment can work and to make it part of the landscape of the investment industry.

And the worst?

I think it’s forgetting about the real world. The investment industry is linked to the planet and to people, and fund managers can often forget that.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
IQVIA Holdings Inc212.75 USD-0.57Rating
Kingspan Group PLC80.83 EUR-5.08
Liontrust Sust Fut Mgd 2 Net Inc198.60 GBP-0.41Rating
Tesla Inc178.01 USD-2.44Rating

About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk

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