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Liontrust European Growth Fund

March 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 5.2%* in sterling terms in March. The MSCI Europe ex-UK index comparator benchmark returned 4.6% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 4.1%.


Investors continued to anticipate economic acceleration as the global vaccine roll-out was extended despite concerns over the AstraZeneca/Oxford vaccine’s links to rare blood clots. In addition, President Biden’s US$1.9 trillion stimulus plan was passed through Congress and is likely to add further fuel to the economic expansion.


In February, this stimulus injection stoked inflation concerns and sparked a sell-off in the sovereign bond market. In March, both US Treasury Secretary Janet Yellen and US Federal Reserve Chair Jerome Powell issued statements indicating that they had no concerns about the US economy overheating. Powell said that higher prices this year are likely to be transitory, while the market has been orderly adjusting to a brighter economic outlook. Yellen added that inflation risks remain subdued despite the stimulus, but the plan could help the US reach full employment in 2022.


In this environment, value stocks continued to outperform: the MSCI Europe ex-UK Value Index rose 5.6% in sterling terms compared to the MSCI Europe ex-UK Growth Index’s 3.6% return. This supported the Fund’s performance, given its current value tilt. All sectors in the MSCI Europe ex-UK ended higher with consumer staples the biggest riser (+6.9%) followed by communication services (+6.4%) and consumer discretionary (+6.2%), while energy (+1.7%) was by far the biggest laggard.


It was a busy month of reporting for the Fund’s holdings. Steel wire transformation and coating company Bekaert (+15%) was one of the highlights, published 2020 results that came in ahead of market forecasts. Effective cost management meant that EBIT (earnings before interest and taxes) margin improved 160bps to 7.2%, resulting in an underlying EBIT increase of 13% to €272m versus the market forecast if €232m. Bekaert said there was a strong rebound in its markets during the final few months of 2020 and for 2021 it forecasts sales of €4bn and an EBIT margin improvement of between 40-60bps.


The impact from the Covid-19 pandemic was more visible in Bank of Ireland’s (+23%) 2020 results as the company swung to an underlying pre-tax loss of €374m. The bank recorded a €1.1bn net credit impairment charge, a sharp rise compared to the €215m charge it booked in 2019, mostly related to its non-performing loans. However, this impairment was at the lower end of company guidance and Bank of Ireland said that – notwithstanding any further deterioration – the majority of the risk from Covid-19 is now captured and impairments in 2021 should be materially lower.


Danish jeweller Pandora (+11%) said organic growth and total sell-out growth were 12% and 7% respectively in February as it continued to reopen stores. A quarter of its stores remained closed at month end, but Pandora said it is pleased with the performance so far in 2021. It maintained its guidance for organic growth of over 8% and EBIT (earnings before interest and taxes) margin of over 21%.


Container shipping company AP Moller-Maersk (+11%) saw its shares rise after the resolution of the blockage in the Suez Canal. Ever Given, one of the world’s largest container ships, became wedged across the canal, causing a major disruption to global trade flow. The canal remained blocked for almost a week before rescue efforts finally dislodged the ship.


Amongst the detractors, German fertilizer company K+S (-10%) fell after it disappointed the market with its 2021 EBITDA guidance of €440m-€540m. This forecast does, however, represent a significant increase from the 2020 level of €267m as K+S highlighted very good demand for potash fertilizers and a further recovery in prices. In 2020, the group reported a €1.8bn adjusted loss, mainly attributable to a €1.9bn impairment loss on assets in its European operating unit. As a result, K+S did not declare a dividend.


Sportswear and equipment maker Adidas’s (-9.6%) shares fell despite trading seeing a strong finish to 2020. Fourth quarter direct-to-consumer sales rose 14%, driven by a strong performance in Greater China, North America and Europe, while e-commerce sales increased 43%. However, overall sales were up only 1% at constant currencies and down 5% in euro terms during the quarter. In its outlook statement, Adidas highlighted the €250m one-off profit hit as it prepares to spin off its Reebok brand into a separate company.


Moncler’s (-6.5%) chairman and CEO Remo Ruffini sold some shares in March. This followed the acquisition announcement of Stone Island and an earlier announcement in which Ruffini and various other shareholders agreed in aggregate to hold no more than 25% of the issued share capital of the company following the acquisition. 


In keeping with the Cashflow Solution investment process, which involves the annual review of companies report and accounts, some portfolio restructuring was implemented in March. We sold Adidas, Amadeus IT Group, Elisa, Gaztransport et Technigaz, Merlin Properties and Roche Holdings. New stocks included ABB, Daimler, Imerys, Rexel, Uponor and Yara International.


Positive contributors to performance included:

Bank of Ireland Group (+23%), Stellantis (+17%) and Bekaert (+15%).


Negative contributors to performance included:

K+S (-10%), Adidas (-9.6%) and Moncler (-6.5%).


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 31.03.21, 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 31.03.21, 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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