Liontrust AR Credit launches with maximum financials exposure

Liontrust's Credit Absolute Return fund has launched with its maximum allocation to financials, including exposure to Lloyds CoCos.

The fund, managed by Liontrust's head of fixed income Simon Thorp, has about 33% of its assets in the financial sector - its highest acceptable level. It is also at its own single issuer limit for Lloyds Banking Group, primarily due to the allocation to CoCos. Thorp says Lloyds' instrument converts to equity if Lloyds' Tier 1 capital ratio falls below 5%. It now stands at over 10%, and Thorp says Lloyds would have to "chew through" £70bn or £80bn to breach 5%. He says this is unlikely and believes 8% is likely be the absolute bottom line after the new EU regulations. "These inst...