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Liontrust Balanced Fund

Q1 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 Liontrust Balanced Fund returned -2.9%% over the quarter, versus its average peer in the IA Mixed Investment 40%-85% Sector, which returned 1.6%*.

Broadly, global equities have steadily driven higher in 2021 as the global economy continues to show signs of recovery from the Covid crisis. Under the surface, however, the picture has been more mixed.

Technology, and US based growth equities in general, had a very strong start to the year up to January when their fortunes reversed (with the technology heavy Nasdaq composite hitting a peak on the 12th of February) with fears of inflation seeing treasury yields begin to rise significantly for the first time since the start of the pandemic nearly a year earlier as the 10-year Treasury yield rose from under 1% at the start of the year to end the quarter at 1.74%. The fear of a rise in inflation and subsequent interest rates resulted in a so-called value rotation as investors began to favour lower duration assets. This rotation has been very widespread, with the general rule of thumb being that the strongest performing areas of the market last year have lagged in 2021, while many of the worst performing stocks in 2020 have rallied back strongly.

The Fund’s positive contributors over the period included Alphabet, CME Group and Microsoft. CME, the Chicago Mercantile Exchange, has effectively cornered the market in various financial instruments, notably including various forms of oil derivatives. CME not only benefits from the network effects associated with providing the sole liquid market for these instruments, it also gains from exclusive access to some of the richest associated data sources in the financial sector. Furthermore, the Covid-19 pandemic has given many derivatives traders more time to work the market, and volatility in many stocks over the course of the year has encouraged trading activity. Alphabet was also among our best performers over the period. This was largely driven by stronger-than-expected fourth-quarter results, with revenues growing 23% year-over-year to $46.7 billion, comfortably ahead of consensus.

Looking at the detractors to overall performance for the quarter, shares in London Stock Exchange were down around 25% over the quarter, with the vast majority of this fall coming when the company released its final-year results on 5 March, on concerns over higher-than-expected expenses to integrate the Refinitiv purchase. As a recap, the Refinitiv acquisition has made LSE the global scale provider of financial data and analytics, moving the business further towards a resilient recurring revenue model and less reliant on trading volumes. Data businesses have to continually invest in their platforms to ensure functionality is optimal and the required financial outlay to do that has worried the market in the short term.


We continue to focus on technology-related stocks or those companies utilising technology to gain a competitive advantage versus their industry peers. While this overweight to the technology sector has been significantly additive in previous quarters, it was a detractor to overall returns in the first quarter of the year. RingCentral, having been a stellar performer for the Fund over the previous quarters, was one of the top detractors over the first in 2021. High growth (and high duration) stocks were put under pressure from rising long term yields on inflation fears that triggered the aforementioned value (low duration) rally and further buffeted during the Archegos Capital collapse. Critically, however, we have seen no degradation of the underlying company, its operations, execution, competitive advantages, and most importantly, its investment case.


The outlook on equity markets continues to be optimistic as the global economy continues its recovery from the pandemic with the successful rollout of vaccination programs in the developed world (particularly the US and UK with the EU and others to hopefully follow). A slight wrinkle however is now fears of inflation, caused by the huge increase in money supply during the Covid-19 crisis now meeting a recovery in demand as well as potential supply shortages. We believe, like many, the best protection against inflation is to own strong companies with competitive advantages and pricing power allowing them pass inflating costs down the chain.

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








Liontrust Balanced C Acc






IA Mixed Investment 40-85% Shares













*Source: FE Analytics as at 31.03.21


**Source: FE Analytics as at 31.03.21.

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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 Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.


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.

Global Fundamental

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