Three years ago Liontrust was a boutique that was out in the wilderness. Its assets under management had plummeted from £5bn at their peak in 2007 to £1bn in 2009 and the group was continuing to haemorrhage assets across the fund range, fuelled by the shock announcement of Jeremy Lang and William Pattisson’s departure in January 2009.
In response, Liontrust had metaphorically battened down the hatches. At risk of alienating investors completely, the group recognised the need to re-assert itself and John Ions was picked as the asset manager’s ambassador, initially as head of retail in early 2010, with promotion to chief executive following shortly after.
Recognised as a straight-talker with a lengthy track record in the industry, it is perhaps easy to see why Ions was lined up for the job. But what was the draw for Ions?
“Liontrust still had a good brand and it had been a successful business,” he says. “Its biggest crime was losing the managers. So for me it was a great opportunity and a challenge to take a business that had lost its way and bring it back to compete and gain market share. The business needed a sense of purpose and direction. It was difficult for everyone to remain positive when they were constantly taking calls requesting redemptions, and they had lost touch with the outside world. Meanwhile there were 150 other groups telling investors exactly what they were doing. The underlying business was good, bad and ugly; it needed a bit of focus and direction.”
Ions joined with the right credentials. Something of a financial services stalwart, he has been in the industry for 25 years. An administration job at Henderson as a student placement gave him a foothold in the industry, leading to roles at Thornton (now part of Dresdner), Prolific Financial Management (acquired by Aberdeen) and Société Générale Asset Management. Before joining Liontrust he was chief executive at Tactica, the asset management business established by Nicola Horlick.
Ions wasted no time in refocusing Liontrust with a view to expansion. As he openly admits, without immediate action “the boutique would have gone bust or been bought”. But where to start?
“The business needed focus and good business practice. It had got stuck. The business was losing half a million a month, so we had to do cost-cutting. We had to strip the business back to basics.
‘We had to get the message out about what Liontrust stood for’
“There were outflows across the board. The Special Situations fund [now £924m] was £15-£20m when I turned up. We closed the global team [led by Ross Hollyman] which had only been there a year when I arrived. They were previously the European value team at GAM.”
Bearing in mind Hollyman’s team had not been given the chance to showcase their skills at Liontrust, only running model portfolios in their short time at the asset manager, one has to ask if letting go of the relative newcomers was a difficult decision to make?
“It was not a decision on them as fund managers, and global equities is a good space to be in, but was I going to spend two years convincing the market that European value managers make good global managers? It was not a radical decision, it was a business decision.”
Hollyman’s team was not the only one to be hit as Ions streamlined the business. The credit team, led by Simon Thorp – which had also only been housed at Liontrust for a year – was next to be moved on. But in this case Ions admits it was not as easy a decision to make. Unlike the global equities team, the credit managers were managing investors’ money. In March 2010 the group had launched the Liontrust Credit Absolute Return fund and had taken £100m inassets, which Ions deems “a good effort”. However, the credit team’s expertise was not in keeping with Ions’s vision.
“They were high-yield specialists in European debt, whereas our clients wanted global credit and the high-yield European debt investors wanted bigger teams. Simon Thorp wanted to be like [fixed income specialist] BlueBay.
“If you are stripping the business back to basics, everyone has got to be on the same page. Everyone has to pull together. Simon had a different view, so we sold the fixed- income arm – at 3.5 per cent of funds under management although it was actually closer to 5 per cent – to Avoca. As we sold the funds, the clients were looked after, which was important to us, so we were just selling the credit team to a bigger group. So, having said we wanted to expand the business, the first two things I did were to close the global equities arm and sell the credit team.”
Cost-cutting measures addressed, Ions set about re-establishing the Liontrust brand. “Liontrust had lost touch, so we committed £1m to marketing and advertising in August 2010. We had to get the message out about what Liontrust represented. We had to say ‘Liontrust is still here’ and focus on the core strengths in the business.”
The strategy was successful. In the third quarter of 2010, Liontrust saw net inflows, which have continued ever since. Indeed, the latest financial results, at the end of March, revealed 11 successive quarters of net inflows. “The key thing was that the foundations were right to build on, which we achieved in the first six months,” Ions says. “So far, so good.”
With Liontrust on an even keel, it was not long before expansion plans were back on the drawing board. In August 2011 Liontrust made its inaugural acquisition, buying Occam Asset Management. “Occam brought several things,” Ions says. “It had a Dublin operation, so international exposure, and it brought us talented people in admin, sales and marketing. It also had two fund management teams, in emerging markets and Asian equities.”
While the incorporation of the Asian equities team has proved successful, leading to the launch of the Liontrust Asia Income fund in March 2012, the emerging markets team did not fare so well. In September the rebranded Liontrust
Emerging Markets Opportunities fund was closed and the ex-Occam managers left the firm.
Meanwhile, a second acquisition saw the group’s AUM rocket past £2bn, from £1.4bn. In March 2012 Liontrust acquired asset manager Walker Crips, having cast a keen eye over managers Stephen Bailey and Jan Luthman.
Clearly not one to rest on his laurels, Ions recently oversaw the launch of the Global Strategic Bond fund. Rolled out in February for Michael Mabbutt, the fund is already approaching $400m (£260m). So, is Liontrust where Ions envisioned it would be?
“If you had asked three years ago where we wanted to be, I would say yes, we are where we wanted to be. If you had asked a year ago I would have said there or thereabouts. We have now trebled our assets under management in three years and they have doubled over the past year. All the time the level of expectation rises in the business. It has been hard work over the last three years but it is only the beginning of what is possible.”
After an eventful three years at the boutique, during which time Ions admits he “got rid of more people than we employ now,” what is next on the agenda? “Income will be an important theme for 30 or 40 years. What we like to do is provide income solutions. There is the potential for global income. There are plenty of opportunities internationally to invest. We have got the capabilities to run funds internally.
“We like multi asset, and Asia and emerging markets. But it could take three years to find managers we like. Do I take a great manager in a sector I do not like, or a great sector with an average person? That is not what we stand for in performance excellence. We have got to be broad in what we look at and we have to be opportunistic.”
With merger and acquisition activity taking a front seat in 2013, notably the recent deal struck between Schroders and Cazenove, I ask Ions if Liontrust is likely to continue on the acquisition trail in the near future.
“We have done two deals and we do not want to be a deal junkie. It is a question of doing it because it is right for the business. It may just be teams that we recruit.
“We have got great potential to grow with what we have got. We hope to double our assets in three years’ time and we are well positioned to do that.”
Having restored Liontrust’s pride, Ions is confident the group will still be going strong in five year’s time.
“We have just signed a new lease on these offices so we will still be here!”
Quick fire questions
Describe yourself in three words
Demanding but fair.
What are the best aspects of your job?
The people I meet and work with.
What would be the first thing you would change about the financial services industry?
Call it the savings industry. Make it simpler for the public to understand and realise how important correct financial planning is.
What would our readers be surprised to learn about you?
Taller than you think.