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Liontrust GF European Strategic Equity 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’s A4 share class returned -6.5%* in euro terms in January. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned -0.8% and -1.1% respectively.


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 slightly lower in euro terms. IT (+2.3%), energy (+2.0%) and materials (+1.0) recorded gains. Real estate (-4.4%), financials (-2.8%), consumer staples (-2.8%) were the worst performers.


Having generated very good performance towards the end of 2020 as market conditions evolved favourably for the portfolio’s value tilt, January saw a setback for both the long book and short books. At the end of the month, the Fund’s net market exposure stood at 66%.


Within the consumer discretionary holdings, Danish jeweller Pandora (-13%) 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.


In a Q4 update, Carnival (-13%) gave another sobering assessment of the impact of Covid-19 on its operations. It suffered an adjusted net loss of US$1.9bn in the quarter but retains US$9.5bn of cash and cash equivalents. Throughout the month it was forced to announce further delays in resuming operations across its various cruise businesses, triggering refund obligations. It is unable to predict when the fleet will return to operations or to give any earnings forecasts, but it has stated that bookings for the first half of 2022 are ahead of the 2019 level.


BW Offshore (-10%) reported an incident aboard a floating production storage and offloading vessel in the Espoir field offshore the Ivory Coast which resulted in two fatalities and a shut down of production.


The long book’s better performers included a number of holdings in the materials sector: Forterra (+7.8%), Evraz (+7.6%), BHP Group (+5.7%) and Rio Tinto (+3.4%). Capital One Financial (+6.2%) also benefitted from a solid set of Q4 results which beat analysts’ estimates on a range of measures, including net interest income which at US$5.87bn was ahead of consensus of US$5.63bn. Quarterly results for Microsoft (+5.0%) also lifted its shares. Revenue in the three months to 31 December rose 17% year-on-year to US$43.1bn, ahead of the US$40.2bn average analyst estimate. Its Azure cloud computing division recorded 50% growth as many companies accelerating their shift to the cloud during the work-from-home conditions imposed by the pandemic.


Among the short book’s more costly positions, a Swiss online pharmacy group rose sharply after reporting better-than-expected Q4 sales, while shares in a US-listed Chinese video sharing website enjoyed a very strong start to the year. The short book’s positive contributors included a Norwegian renewable energy producer and a Swedish online gaming studio whose shares both slid ahead of scheduled Q4 results in February.


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








Liontrust GF European Strategic Equity
A4 Acc EUR






MSCI Europe






HFRX Equity Hedge EUR







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


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

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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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