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Liontrust Global Income 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 -1.4%* in sterling terms in January. The MSCI ACWI High Dividend Yield Index comparator benchmark returned -1.2% and the average return from funds in the IA Global Equity Income sector – also a comparator benchmark – was -0.4%.


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.


The year-end rally in global markets extended into the first half of January before markets lost ground to finish the month lower in sterling terms. Within the MSCI World Index of developed markets, energy (+2.6%) was the best performing sector as oil prices added another 8% to US$55.9 a barrel (Brent). Healthcare also registered a positive return in sterling terms (+0.7%). Consumer staples (-4.6%) and industrials (-3.1%) were the weakest sectors.


Q4 updates drove the biggest stock movements in the Fund during January. Results from student loan issuer Navient (+14%) showed an improvement in Q4 core earnings to US$166m compared to US$153m in the 2019 comparable period. The earnings growth resulted from an improvement in both net interest income and loan loss provisions.


In a Q4 update, Carnival (-15%) 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.


Air New Zealand (-12%) and International Consolidated Airlines (-11%) fell on similar concerns over the timeframe for a resumption of normal operations.


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.


Seagate Technology (+5.9%) rose as it referred to “broad-based improvement across nearly every served market and geography” when reporting US$2.62bn of revenue and earnings per share of US$11.2 in its most recent quarter. For the next quarter, it expects to grow both measures, to around US$2.65bn and US$1.30 respectively. The company experienced good demand for its cloud storage solutions as well as its more traditional products such as hard drive disks.


During January, we initiated a portfolio position in K+S, a manufacturer of pharmaceutical-grade sodium chloride.


Positive contributors to performance included:

Navient (+14%), Keller Group (+8.6%) and BP (+6.6%).


Negative contributors to performance included:

Qualicorp Consultoria e Corretora de Seguros (-16%), Carnival (-15%) and Pandora (-14%).


The Fund has an income target benchmark of the yield on the MSCI World Index. The Fund’s most recent income distribution was announced on 31 December 2020. Its distributions over the 12 months to 31 December 2020 – expressed relative to the Fund’s price on 31 December 2019 – give a 12-month yield of 3.7%. The MSCI World Index yield on the same basis was 2.0%.


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








Liontrust Global Income I Inc






MSCI ACWI High Dividend Yield Index






IA Global Equity Income













*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.

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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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