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We have recently added the Liontrust First Income Fund to the Wealth 150, our list of favourite funds in each sector.
The falls in the stock market over the last year have correspondingly raised the yield on the stock market and, by extension,
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Liontrust First Income currently has an attractive yield and, perhaps most importantly, Jeremy Lang (the fund manager) expects dividends to increase this year. Mr Lang’s investment approach is essentially focused on identifying companies that are being undervalued by the market. He identifies three main categories, which he calls “boring”, “ugly” and “unfashionable”.
The ‘unfashionable’ companies are those that he considers to be good companies, but where the market is currently pricing them as though they are an average company. ‘Boring’ companies are average ones that are being valued as though they are poor, whereas the ‘ugly’ firms are those Mr Lang acknowledges as being poor businesses, but that are nevertheless still being undervalued by the market. In each case there is potential for growth if Mr Lang is correct in his evaluation of the company.
Jeremy Lang’s investment style is likely to be most effective after stock markets have been through a period of flux. This is a time when previously underappreciated companies are likely to be reappraised and have their true strengths recognised. The next few years could be just such a period as the market comes to terms with the effects of the credit crunch; in our view this could be an excellent time to buy the Liontrust First Income Fund.
» Key Features of the Liontrust First Income Fund
Fund research is provided by Hargreaves Lansdown. Hargreaves Lansdown is an independent broker offering unit trust, stockbroking and other pension and investment services. No news or research item is a personal recommendation to deal.