Liontrust Sustainable Investment Annual Review 2021 - International - Report - Page 5
Identifying superior stocks
01
Thematic analysis
– identifies companies with
strong and dependable growth
prospects due to alignment
with our themes
02
03
04
Sustainability analysis
– focuses on those companies
with excellent management
and core products or services
that contribute to society or the
environment
Analysis of business
fundamentals
– selects only those companies
positioned to deliver high
returns on equity
Valuation analysis
– determining that the shares
of the company will be worth
significantly more in the future
Identifying emerging trends and long-term themes is the
cornerstone of our process. From the development of
personalised medicine to the transition to lower carbon
fossil fuels, we are fascinated by the wide-ranging trends that are
changing the world and the opportunities they create. Thirty years
ago, the IBM PC XT was the pinnacle of technology for example;
today, we have the iPhone, which is not only much more powerful
but can also fit into your pocket and is half a million times more
energy efficient.
01
We can also point to advances in healthcare that have led to
dramatic improvements in life expectancy. For instance, if a man
was diagnosed with prostate cancer 30 years ago, he had a less
than 50% chance of living more than five years; today, the odds
are around 90%.
Why is this relevant to investors? Many of these outcomes have
been delivered by the power of capitalism and the creativity of
businesses generating strong profit growth and investment returns.
It is these innovative businesses in which our SF portfolios have
invested for two decades, and we feel most investors underestimate
the speed, scale and persistency of such trends within our economy.
We therefore look at the world through the prism of three mega
trends – Better resource efficiency (cleaner), Improved health
(healthier) and Greater safety and resilience (safer) – and 20
themes within these.
Cleaner: Using our resources more efficiently (water, increasing
recycling of waste, lower carbon energy sources and energy
efficiency)
Healthier: Improving our quality of life through better education,
healthier lifestyles and diet or better healthcare
Safer: Making the systems we rely on safer or more resilient.
This includes car safety, keeping our online data safe with cybersecurity and spreading risk through appropriate insurance mechanisms
Themes – strong and dependable growth prospects
Better resource efficiency
Improved health
Greater safety and resilience
• Improving the efficiency of energy use
• Providing affordable healthcare
• Increasing financial resilience
• Improving the management of water
• Connecting people
• Saving for the future
• Increasing electricity generation from
renewable sources
• Delivering healthier foods
• Insuring a sustainable economy
• Building better cities
• Leading ESG management
• Providing education
• Improving auto safety
• Enabling innovation in healthcare
• Enhancing digital security
• Enabling healthier lifestyles
• Better monitoring of supply chains and
quality control
• Improving industrial and agricultural
processes
• Increasing waste treatment and recycling
• Making transportation more efficient
While these themes are at the heart of our idea generation, there are three further criteria all companies have to satisfy.
Liontrust Sustainable Investment: Annual Review 2019 - 5
