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Liontrust GF European Smaller Companies 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’s A5 share class returned 7.0%* in euro terms in March. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned 5.2%.


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 in 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 Value Index rose 7.4% in euro terms compared to the MSCI Europe Growth Index’s 5.4% return. This supported the Fund’s performance, given its current value tilt. All sectors in the MSCI Europe ended higher with consumer staples the biggest riser (+9.4%) followed by communication services (+9.0%) and industrials (+7.9%), while energy (+1.9%) was by far the biggest laggard.


London-listed housebuilder Vistry Group (+35%) was the Fund’s biggest gainer. It said a strong second half performance helped 2020 adjusted pre-tax profit exceed its expectations. Greater demand in the second half saw the group’s private sales rate per outlet per week increase 15%, while pricing saw a marginal increase during the 12 months. Trading in early 2021 had continued in the same vein and was running ahead of the robust start it made to 2020. The company guided 2021 pre-tax profit to be more than double the previous year’s figure.


The impact from the Covid-19 pandemic was more visible in Bank of Ireland’s (+25%) 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.


Steel wire transformation and coating company Bekaert (+17%) 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.


Danish jeweller Pandora (+13%) recorded organic growth and total sell-out growth of 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%.


There were very few detractors from Fund performance during March. AKKA Technologies (-12%) was one of them, after recording a 17% decline in revenue during 2020, which it said was a direct consequence of the global pandemic and lockdown measures. The company also swung to an operating loss of €171m from a profit of €121m in 2019. However, underlying performance – which excludes the €59m Covid related costs amongst other items – was better, with an adjusted operating profit of €19.5m. AKKA added that earnings visibility in 2021 continues to be affected by the pandemic and, although momentum is improving, Q1 earnings are still likely to see a year-on-year decline.


We began to implement changes resulting from our annual review of companies’ report and accounts. So far this has included the sale of Gaztransport et Technigaz, Judges Scientific and Nemetschek. We bought IMI, Pagegroup and Rexel.


Positive contributors to performance included:

Vistry Group (+35%), Bank of Ireland (+25%) and Bekaert (+17%).


Negative contributors to performance included:

AKKA Technologies (-12%), Concentric (-12%) and Elior Group (-6.1%).


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





Liontrust GF European Smaller Companies A5 Acc EUR





MSCI Europe Small Cap Index






*Source: Financial Express, as at 31.03.21, total return (net of fees and income reinvested). Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 31.03.21, total return (net of fees and income reinvested). Discrete data is not available for five full 12 month periods due to the launch date of the portfolio. Investment decisions should not be based on short-term performance.

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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