Mr Ions, how important is Switzerland to Liontrust?

It is currently our second most important market after the UK. Outside our home market, Switzerland is where we have invested most in distribution.

It is an exceptionally well-developed market with knowledgeable investors, from private banks to institutions. Our role is to provide the building blocks they need to construct the right solutions for their clients. That means understanding what they are looking for and where we have compelling investment propositions.

How do you measure success in the Swiss market?

I look first at the quality of our relationships and our visibility. If you get those right, the assets will follow. One or two large orders do not mean you have established yourself in a market.

"I would very much like us to have investment capabilities in Switzerland as well."

Alongside the large institutions and private banks, Switzerland has many independent wealth managers and family offices. The right people need to know us, understand what Liontrust stands for and trust us. They need to know where we can help them.

Today’s inflows are often the result of work you did several years earlier.

Do you want a larger presence in Switzerland?

Yes. A bigger presence would be one measure of success. Switzerland should be more than a distribution hub for Liontrust. I would very much like us to have investment capabilities here as well.

I have looked at Swiss businesses as potential acquisitions before, and I will continue to do so. Having a broader local business would also strengthen our connection with clients.

Would you prefer an acquisition to hiring individual managers or teams?

We have always developed the business in three ways: organic growth, hiring people and teams, and acquisitions.

Organic growth is something we can influence directly every day. Hiring a team is another option. But a new team needs three years to establish a three-year track record. While a fund is small, larger clients may also be unable to allocate because of their own concentration limits.

An acquisition can accelerate that development. But it has a specific purpose for us: bringing in investment capabilities that complement what we already offer.

Is there a timetable for a Swiss acquisition?

The objective is to grow properly. The next steps need to be right for the business.

Our proposition to fund managers is straightforward. If you have a strong investment process, we will create an environment in which you can implement it. We provide the controls, resources, brand and routes to market.

"The acquisition of GAM would have allowed us to achieve several strategic objectives in one step."

Good performance alone is not enough. If potential clients do not know or trust a firm, it will struggle to raise assets. Investment capability and distribution are closely connected.

Do you still regret that the Zurich based GAM acquisition failed a few years ago?

I don’t regret for a moment what we were trying to achieve. The strategic rationale was clear. GAM had broad European distribution, strong connections in Switzerland and investment capabilities that would have complemented ours.

We were more focused on solutions for the domestic UK market. The acquisition would have allowed us to achieve several strategic objectives in one step.

Once it did not happen, we moved on. It was a challenging period for us, but we continued investing in our proposition and operating platform.

Why have the past few years been so difficult for Liontrust?

Our teams had different investment processes, but several strategies shared an underlying bias towards small and mid-cap quality growth companies.

When markets shifted towards large caps, momentum and value, those approaches came under pressure at the same time. We also had exposure to UK and sustainable equities, which faced their own headwinds.

Normally, clients combine different investment styles. When one struggles, another provides some balance. But when the performance gap becomes very wide, it changes allocation decisions.

You continue to see a role for acquisitions. What makes them work?

Integration is critical. Across the industry, acquisitions have often struggled because of different systems and lengthy internal processes. A business can spend years looking inwards, while clients lose sight of what it stands for.

We have invested heavily in our operating platform and use BNY’s infrastructure. That makes it easier to bring additional investment teams into the business. We can provide them with our platform, brand and access to distribution partners.

A smaller business can have excellent managers and strong performance, but still struggle to fulfil its potential if it lacks resources and routes to market.

You expect a renaissance in active management. What is changing?

In my view, the powerful momentum trade driven by capital flowing into a small number of large stocks is changing. The world is also moving from globalisation towards greater regionalisation. That affects companies, markets and investment flows.

Europe is not a homogeneous economy. Different countries have different industrial strengths. Identifying the best businesses becomes more important than allocating purely according to market capitalisation.

We do not begin stock selection by deciding that we need a certain number of German or French companies. We ask which businesses generate cash flow, own intellectual property and have recurring orders and consistent business models.

Where do you see the strongest opportunities?

One of our distinct investment processes is Cashflow Solution, which is applied to the Liontrust GF European Dynamic Fund. The process identifies companies that generate significantly more cash than they need to sustain their planned growth yet are lowly valued by investors on that measure and are run by companies committed to an intelligent use of capital.The opportunity set in fixed income is also broadening. The Liontrust GF High Yield Bond strategy seeks to take advantage of inefficiencies in fixed income markets.

"It creates a better opportunity for active managers with a clear process and the conviction to follow it."

And institutional clients are increasingly asking where they can invest outside the US and how they can diversify their portfolios.

Low-cost index funds have served many investors very well. Why should that change?

Investors who held a low-cost S&P 500 tracker over recent years could have done very well. But we also had an unusual combination of circumstances: a long period of low interest rates, few attractive alternatives and substantial capital flowing into equities.

The question is whether you can simply extrapolate that environment. I do not think you can. Concentration in a small number of stocks, geopolitical tensions and a different interest-rate environment require a more discerning approach.

That creates a better opportunity for active managers with a clear process and the conviction to follow it.

Which strategies are attracting the most interest from Swiss investors?

We are seeing interest in European equity strategies and renewed engagement with fixed income. Our technology and innovation team is also attracting attention, partly because its portfolio differs from one heavily concentrated in the largest technology companies.

You do not necessarily have to exclude those businesses. But you do not have to hold them at a 12 percent weighting either. Those are precisely the decisions active management allows you to make.

What distinguishes your conversations with Swiss clients?

They are very well prepared. They have reviewed the material, screened providers and developed specific questions about our investment process.

Their due diligence is among the most demanding we encounter. That suits us because we place a great deal of emphasis on explaining our processes. We need to be able to explain why a portfolio has performed as it has, including when the results have fallen short of expectations.

What I particularly respect about the Swiss market is that clients know what they want and have done the work to understand our proposition. We start the conversation on common ground.