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Liontrust UK 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 Liontrust UK Growth Fund returned 3.2%* in March. The FTSE All-Share Index comparator benchmark returned 4.0% and the average return in the IA UK All Companies sector, also a comparator benchmark, was 3.8%.


Market gains continued to be driven by the prospect of economic recovery from Covid-19 restrictions. Within the UK market’s solid rise, individual stock movements were heavily influenced by the reporting season for 2020 results.


Before delving into the portfolio’s batch of earnings releases, it’s worth first highlighting a surprise move from Renishaw (+12%) to launch a formal sale process after co-founders David McMurty and John Deer decided to sell their 50%+ interests in the business.


This is a something of a landmark event for the Economic Advantage funds that own it: Renishaw was one of the first stocks we bought for the Liontrust UK Smaller Companies Fund more than 20 years ago as we launched our investment process and it has delivered outstanding investment returns for our funds. We will be very sorry to see the company leave the stockmarket. The extent of Renishaw’s growth over the last two decades was recently illustrated by its promotion to the FTSE100 during the large-cap index’s Q1 review.


The specialist in high-tech precision measuring and calibration equipment has excellent levels of intellectual property, a global distribution network and strong customer relationships; we expect Renishaw to attract a number of suitors, although it has emphasised its desire for an owner that respects the company’s history, culture and importance to local communities.


Returning to financial reporting, it was a busy month for the Fund with updates driving some of the larger share price moves. One of these was Brooks Macdonald Group (+17%), which reported a 13% increase in assets under management to £15.5bn at 31 December 2020, as good investment performance and the acquisition of Lloyds Banking Group’s Channel Island funds offset net outflows on its existing fund range. Fund flow trends have begun to improve, and the company expects new flows to be “modestly positive” in the second half of the year.


Results from Domino’s Pizza Group (+13%) gave more detail on what we already knew was a very busy year for the company. Like-for-like system sales rose 10% to £1.35bn as online sales grew by 24% to account for 94% of the Domino’s delivery sales in the UK. The company commented that trading in 2021 has started strongly, with its highest ever sales week recorded over the new year period. The bullish tone was supplemented by some ambitious new medium-term growth targets: the opening of 200 more stores and a sales target of £1.6bn - £1.9bn.


While results releases also drove a number of the Fund’s detractors, Petrofac (-27%) was the worst performing stock after the Abu Dhabi National Oil Company (ADNOC) chose to suspend it from competing for new work following an SFO investigation into historic contract awards in the UAE in 2013 and 2014. The energy industry contractor will continue to manage two engineering, procurement and construction projects currently under construction for ADNOC.


Shares in Weir Group (-10%) slid despite reporting a revenue drop of only 1% in 2020 in constant currency terms. The weakness may have been triggered by a 13% reduction in orders to £1.86bn and a slightly cautious outlook statement. Following the sale of its Oil & Gas division earlier this year, Weir Group is now focused on premium mining technology.


John Wood Group (-9.5%) also saw some order book weakness in 2020; it shrunk 17% to US$6.5bn. The pandemic and low oil prices combined to depress activity levels for the engineering group. As it prepares for another year of soft demand in 2021, the company is focusing on improving profit margins through cost and efficiency drives.


Industrial thread manufacturer Coats Group (-8.5%) reported a 19% fall in organic revenues and a 43% tumble in adjusted operating profit in 2020. The end of the year saw more encouraging signs that Covid disruption may be lessening: organic sales for November and December were down only 5% year-on-year compared with a 15% shortfall in Q3 and 26% drop in the first half of the year.


WH Smith (-5.9%) described its recent trading as better than expected. In November and December, it achieved positive cash flow. Although the introduction of another lockdown at the start of January meant that it began to see cash levels depleted again, the monthly burn cash rate was in the £12m - £17m range rather than the £15m – £20m initially expected. Retail footfall levels were also better than expected, with January 2021 and February 2021 at 74% and 84% of their 2019 levels respectively. 


Positive contributors included:

Brooks Macdonald Group (+17%), British American Tobacco (+14%), Domino’s Pizza Group (+13%), Renishaw (+12%) and Spectris (+10%).


Negative contributors included:

Petrofac (-27%), Weir Group (-10%), John Wood Group (-9.5%), Coats Group (-8.5%) and WH Smith (-5.9%).


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







Liontrust UK Growth I Inc






FTSE All Share






IA UK All Companies













*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. Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the GF UK Growth Fund may differ from the performance of the UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.


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.

Commentaries Economic Advantage

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