Liontrust is “increasingly at risk” of running out of money to pay its dividend, an investment bank has warned, as the asset manager struggles to keep investors from withdrawing their cash.
In a research note, RBC analysts cut expectations for Liontrust’s adjusted profit before tax by one per cent for 2025, 14 per cent for 2026 and 16 per cent for 2027.
Ahead of a trading update from the asset manager, RBC updated its forecasts and predicted that Liontrust’s investors have pulled £1bn from its coffers throughout the last quarter, up from the £700m it had previously projected.
The poor performance from markets in recent months is also expected to eat into Liontrust’s existing assets, analysts said, with RBC forecasting a three per cent drop from market movements.
“The majority of Liontrust’s assets under management are invested in small and mid cap UK, with the FTSE 250 down six per cent,” noted RBC analyst Mandeep Jagpal.
In total, Jagpal said he expected the firm’s assets under management to have fallen by five per cent throughout the quarter, with assets dropping to just £22.9bn, representing more than a £10bn loss in the last three years.
As a result, Liontrust received a stock price target downgrade from RBC, falling from 370p to 320p. It currently sits at 355p.
“Following our earnings downgrades, the dividend looks increasingly at risk, as we forecast surplus capital to fall from £46m at the first half of 2025 to just £5m by the end of 2025,” said RBC analyst
In addition to raising concerns over Liontrust, Jagpal also downgraded forecasts for rival asset manager Polar Capital, slashing its target stock price from 600p to 530p.
The analyst still assigned Polar an ‘outperform’ rating, but warned that the group’s high exposure to US technology was likely to dent its profitability, given its poor performance.