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Liontrust European Growth Fund

January 2021 review
Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

The Fund returned -3.9%* in sterling terms in January. The MSCI Europe ex-UK index comparator benchmark returned -2.3% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was -2.0%.


January saw investors attempting to digest newsflow around the pace at which Covid-19 vaccines could be approved and distributed in various regions, as well as analysing the ongoing spread of the virus. With new variants causing higher transmission rates, lockdown measures continued to be introduced globally.


The pace of vaccination varied greatly: Israel had administered a dose to over 50% of its population by the end of the month and the UK had achieved 14%, but European countries such as Germany (3%) and France (2%) saw a slower roll-out.


The inauguration of US President Biden ensured that it was also an eventful month away from pandemic developments. The transfer of power was marred by mobs who stormed the US Capitol building, leading to Trump being banned by Twitter and impeached for a second time, charged with “incitement to insurrection”. As Biden took office, he set about gaining support for his proposed US$1.9tn stimulus plan, a task made easier earlier in the month after the Democrats won two key run-off races in Georgia to gain control of the US Senate.


In European markets, the year-end rally extended into the first half of January before markets lost ground to finish the month lower in sterling terms. IT (+1.1%) was the only sector to record a gain. Consumer staples (-5.1%) was the heaviest faller, followed by real estate (-4.6%) and financials (-3.9%).


Consumer discretionary (-3.5%) also lost ground and this sector, having been one of the Fund’s strongest contributors to performance last month, was a source of weakness in January.


Q4 updates drove the biggest stock movements in the Fund during January. One of the best performers was ASML (+9.3%), a company that makes lithography machines for use by the semiconductor industry. In January, it reported Q4 sales of €4.3bn – above its previous guidance due to additional shipments of deep ultraviolet (DUV) lithography systems. Its Q1 guidance was stronger than expected at a sales range of €3.9bn - €4.1bn versus analyst forecasts of €3.5bn. The gross margin outlook also positively surprised, as ASML predicted a margin of 50% - 51% rather than the 49% analyst consensus forecast.


Finnish telecoms operator Elisa (+8.1%) generated 2.2% growth in Q4 revenues to €498m, exceeding consensus forecast of €491m. While the Covid-19 pandemic meant that mobile service revenue dropped to reflect travel limitations, it also drove mobile voice and data consumption higher. 


Although revenues at industrial equipment manufacturer Atlas Copco (+6.1%) dropped 6% overall, much of this fall stemmed from strength in the Swedish kroner, with sales unchanged on an organic basis. The company commented that demand for its equipment and services had improved quarter-on-quarter, with volumes increasing in all regions except North America. Organic growth in orders received of 7% was particularly encouraging, driven by strong growth in Europe and Asia.


Within the consumer discretionary holdings, Danish jeweller Pandora (-14%) suffered a fall. Its shares had performed well in December after it announced that organic growth would exceed its guidance range of -14% to -17% by at least 1 percentage point. In January it updated guidance to a -11% organic sales change in 2020. It also stated that operating margins should be about 20%, higher than the December guidance of around 19%. However, it seemed that investors had anticipated improving trading momentum from the company and – with the shares having performed very strongly since March 2020 – looked to take some profits.


Adidas (-13%) was another sector holding to slide. Although it didn’t issue any updates on trading, it did indicate that its ownership of the Reebok brand – which it acquired for US$3.89bn in 2006 – is under review, with a decision to be made by March.


Brewer Royal Unibrew (-15%) also lost some ground, perhaps suggesting some nervousness over the sales impact of the latest lockdown measures as pubs and restaurants close.


During January, we sold the Fund’s position in Recordati Industria Chimica e Farmaceutica due to deteriorating cash flow characteristics. We initiated a position in K+S, a manufacturer of pharmaceutical-grade sodium chloride.


Positive contributors to performance included:

ASML (+9.3%), Elisa (+8.1%) and Atlas Copco (+6.1%).


Negative contributors to performance included:

Royal Unibrew (-15%), Pandora (-14%) and Simcorp (-13%).


Discrete years' performance** (%), to previous quarter-end:








Liontrust European Growth I Inc






MSCI Europe ex UK






IA Europe Excluding UK













*Source: Financial Express, as at 31.01.21, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 31.12.20, total return (net of fees and income reinvested), bid-to-bid, primary class.

Understand common financial words and terms See our glossary

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in Funds managed by the Cashflow Solution team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Liontrust European Growth Fund holds a concentrated portfolio of stocks, if the price of one of these stocks should move significantly, this may have a notable effect on the value of the respective portfolio. The Liontrust Global Income Fund's expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. 


The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.

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