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Liontrust’s Cross: ‘I am a great believer that this is a really long game’

One of the longest-running fund managers, Liontrust’s Anthony Cross on the importance of loyalty, a good process and why the grass is not always greener elsewhere

Something Liontrust prides itself on is its investment processes across the various management teams. Its Economic Advantage team is made up of Anthony Cross, Julian Fosh, Victoria Stevens and Matt Tonge, and it is a process which is incredibly detailed.

Speaking with Money Marketing, Cross says the team’s funds are looking to find companies that can compound out growth over time. The strongest barriers, he adds, come through companies that are able to exploit intangible assets, or intellectual capital. He says: “Any company we invest in must demonstrate either strength of intellectual property, strength of distribution network or high contracted recurring income of at least 70 per cent of turnover.”

The team invest in companies that have spent lots on research and development, have often built up world-beating products which are easily protected, and can often sell those products throughout the world. The team are well-known for their strong process, something which has clearly paid off in recent years when it comes to performance.

The chart below shows Cross’s performance (using an average of all funds he manages) versus the Investment Association UK All Companies sector over five years.

Rare breed
It all began for Cross after university – where he read politics at Exeter University – when he looked into fund management after an interviewer at Scandinavian Bank gave him the idea: “I went away and read up about it, and realised it mixes an obvious interest in business, but also just an interest generally in history, people and politics. If you are a well-rounded individual, that’s quite important in investment. If you look at a lot of successful fund managers, lots of them are historians or might have read politics.”

His first job in fund management was at Schroders, where he joined on a graduate scheme and stayed for seven years. He eventually joined Andy Brough on the smaller companies team until Liontrust approached him in 1997. “I thought I needed to go out and prove to myself that I can run money,” he says. From there, the team has gone from strength to strength. His first three months at the company were spent coming up with an investment process to use and, once developed, it was applied to the Smaller Companies fund in 1998.

He says: “We then launched the Special Situations fund in 2005. Julian Fosh joined me in 2008 and in 2009 we took on the Growth fund from a manager who had just left. We were lucky to then recruit Matt and Victoria in 2015 and later launched the Micro Cap fund in March 2016.”

With now more than 20 years at Liontrust under his belt, Cross remains a rare breed of manager who has spent more than 10 years at a company, and is now one of the longest-running fund managers. He believes this comes down to there being a danger that people believe the grass is always greener on the other side: “If you’re not being managed effectively, you have the danger of thinking you can try to manage it elsewhere. I often think it’s a mistake. It is really important to be patient and allow your ability to slowly but surely compound returns, and those returns will eventually get noticed.

“I am a great believer that this is a really long game. And if you quietly build your investment returns and your own brand, eventually people will recognise that and start to put money with you.

“It can take a long, long time. Often people jump about too early and should have stayed put.”

People who manage decent blocks of money have played the long game, he says. Which is exactly what he has managed over the years. The Special Situations fund is a prime example, more than doubling in three years – from £1.5bn in November 2015 to £3.9bn at the time of writing.

Loyalty is something Cross feels is important for clients: “[They] put faith in you as an individual and run their clients’ money. You build up a long-term relationship and what they need is people to stay around and do what they say they are going to do.”

He says the biggest, and perhaps most obvious, thing that has changed in his two decades is how managers now get information, and that the playing field has “levelled”.

“Information is now released fairly to everyone, so we have just as good information as fund houses who are a lot bigger,” he concludes. 

Anthony Cross manages the Liontrust UK Smaller Companies, Special Situations, UK Growth and UK Micro Cap funds

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  1. Equity investing has always been a long game and, notwithstanding the bull market we’ve all enjoyed over the past eight years, those who expect anything different are guaranteed to be disappointed. Equity funds are not, as still too many people blithely assume, turbo-charged cash accounts that only ever go up. Now perhaps is the worst time to be investing in equities, yet far too few people understand that the best time to invest is when markets have slumped.

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