Liontrust Asset Management

The Liontrust Cashflow Solution. H i t l it b h i l fiHow investors can exploit behavioral finance.

An investment process developed by Gary West and James Inglis-Jones.est e t p ocess de e oped by Ga y est a d Ja es g s Jo es

The Liontrust Cashflow Solution

What happened next…?


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2468

Prof

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lit

-4-20

-8-6

-5 -4 -3 -2 -1 0 1 2 3 4 5Year of selectionYear of selection

Hirshleifer et al. on balance sheet bloat1

The Liontrust Cashflow SolutionThe Liontrust Cashflow Solution

What happened next…?

161820

8101214

ity

2468

Prof

itabi

li

-4-202

-8-6

-5 -4 -3 -2 -1 0 1 2 3 4 5

Y f l tiYear of selection

Hirshleifer et al. on balance sheet bloat2

The Liontrust Cashflow SolutionThe Liontrust Cashflow Solution

US EVIDENCE Returns to operating asset growth strategy (cash flow)

60

70

p g g gy ( )

40

50

60Average annual return: 14.9%

20

30

0

% r

etur

n

0

10

%

-20

-10

1965 1970 1975 1980 1985 1990 1995 20001965 1970 1975 1980 1985 1990 1995 2000

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The Liontrust Cashflow SolutionMonthly returns of The Cashflow Solution

Combined portfolio of all top quintile (long universe) and bottom quintile (short universe) stocks, as


Hedge fund(launched 6.12.06)

Combined portfolio of all top quintile (long universe) and bottom quintile (short universe) stocks, as defined by Liontrust’s cash flow rations, versus an equally‐weighted universe

500Cashflow Solution top quintile (long) and bottom quintile (short)

400

450

p q ( g) q ( )

Whole universe (equally weighted)

300

350

200

250

UCITS III fund (launched 8.7.09)100

150

Source: Liontrust European Investment Funds Limited

50

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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The Liontrust Cashflow SolutionThe Liontrust Cashflow SolutionProcess returns

Monthly gross returns of Liontrust European Long Short Fund versus a combined portfolio of its long

180

Monthly gross returns of Liontrust European Long‐Short Fund, versus a combined portfolio of its long and short universes (the top and bottom quintiles of our pan‐European universe ranked on our cash

flow measures, excluding trading costs) and the whole universe (equally weighted)

160 NAV GrossQ1-Q5 ex trading costUniverse

120

140 Universe

80

100

60

80

40 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09

Source: Liontrust European Investment Funds Limited 5

Liontrust First Income Fund

Total return since launch


Total return, since launch

Fund +206.9%

Sector +150.0%

I dIndex +133.6%

Source: Financial Express, bid to bid basis, total return, 1.8.96 to 11.1.10. Past performance is not a guide to the future.

Liontrust First Income Fund, FTSE All Share Index, UK Equity Income Sector.6


Total return under The Liontrust Cashflow Solution


Total return, under The Liontrust Cashflow Solution

Fund +48 3%+48.3%

Index +47.7%

Sector +41.2%


Liontrust First Income Fund, FTSE All Share Index, UK Equity Income Sector.7

Liontrust First Income FundLiontrust First Income FundReturns to an intersection approach

Dividend yield and The Liontrust Cashflow Solution 1995 2009

Liontrust cash flow ratios:IndexLiontrust cash flow ratios:

Dividend yield and The Liontrust Cashflow Solution 1995-2009UK stock market (ex financials). Percentage returns, indexed to 0.

Liontrust cash flow ratios:Bottom quintile

IndexLiontrust cash flow ratios:Top quintile

780622

371277

158 121 113121 11316

-32Top Top Top High FTSE All‐ Low Bottom Bottom Bottom p

quintile, high

yielding

pquintile

pquintile, low

yielding

gyielding stocks

Share Index yielding stocks

quintile, high

yielding

quintile quintile, low

yielding

Equally weighted portfolios of stocks with a market capitalisation over £250m, divided in to above and below median yield, rebalanced monthly. Source: Liontrust European Investment Funds Limited. Past performance is not a guide to the future.

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Liontrust Continental Europe Fund


Liontrust Continental Europe Fund


Fund 18 1%+18.1%

Index +10.4%

Sector +6.1%


Liontrust Continental Europe Fund, FTSE All‐World Developed Europe ex UK Index, Europe ex UK Sector.9

Liontrust Continental Europe FundLiontrust Continental Europe Fund3 year anniversary performance summary

Percentage returns of the Fund and the IMA Europe ex UK sectorPercentage returns of the Fund and the IMA Europe ex UK sector relative to the FTSE All-World Developed Europe ex UK Index (rebased to zero)

Fund+6.08

Fund+1 99

Fund+6.99

Sector+0.38

Fund‐0.19

+1.99

Sector‐1.97

0.38

Sector‐4.91

Sector‐5.14

1 year to 15.11.07 Position 1 year to 15.11.08 Position 1 year to 15.11.09 Position Since launch (15.11.06)1 year to 15.11.07 Position 5th/96

1 year to 15.11.08 Position 59th/104

1 year to 15.11.09 Position 14th/110

Since launch (15.11.06) Position 9th/96

Source: Financial Express, bid to bid basis, total return. Past performance is not a guide to the future. 10

Liontrust European Long/Short Fund


Liontrust European Long/Short Fund


FundFund +44.5%

FTSE All‐World Developed EuropeEurope ‐18.1%

Source: Financial Express, bid to bid basis, total return, based in €, 6.12.06 to 31.12.09. Past performance is not a guide to the future.

Liontrust European Long/Short Fund, FTSE All‐World Developed Europe Index.11

Contact DetailsContact Details

Mickey MorrisseyMickey Morrissey Head of DistributionDirect Line: +44 (0)20 7412 1768( )Mobile: +44 (0)7770 648711Email: [email protected]

Stephen Corbett Sales ManagerSales ManagerDirect Line: +44 (0)20 7412 1771Mobile: +44(0)7825 094563Mobile: 44(0)78 5 094563Email: [email protected]

Liontrust Asset Management PLC 2 Savoy Court London WC2R 0EZFund enquiries: +44(0)20 7412 1700 Administration & Dealing: +44(0)844 892 0560 Email: [email protected] www.liontrust.co.uk

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