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Liontrust European Growth Fund

May 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 5.3%* in sterling terms in May. The MSCI Europe ex-UK index comparator benchmark returned 1.5% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 1.6%.


May saw further evidence of a rebound in economic activity and a rise in inflationary pressures, with investors choosing to attach more weight to the benefits of the economic recovery than the associated risk of monetary policy being tightened.


The European Commission upgraded its 2021 economic growth forecast for the euro area to 4.3% from 3.8% while the Bank of England upgraded its UK estimate to 7.25% from 5%.


Inflation is on the rise too though: in the US, a 4.2% year-on-year increase in CPI was more than expected, and prompted further discussion around the removal of current ultra-accommodative monetary policy, in the US and worldwide.


US Treasury Secretary Janet Yellen warned that rates may need to rise. However, minutes from the US Federal Reserve’s April policy-setting meeting suggested that, while some members would be open “at some point” to curtailing bond purchases if growth continues apace, there is no consensus yet on tightening.


A strong rise in European markets had a slight cyclical tilt to it, with consumer discretionary (+4.1%), energy (+3.7%) and financials (+3.0%) some of the largest risers while utilities (-0.8%) and health care (+0.6%) were among the laggards.


The Fund has a healthy weighting to the consumer discretionary sector and saw good gains for Pandora (+17%), Stellantis (+16%) and Moncler (+13%).


Danish jeweller Pandora beat consensus with its Q1 results. Organic sales were only down 3% on the 2019 pre-Covid level, despite 30% of stores being closed. Pandora commented that US sales were strong, supported by stimulus packages that have fuelled consumer demand. Due to this strong start to 2021, Pandora upgraded its full-year organic growth forecast to “above 12%” from “above 8%” and nudged operating profit guidance up to “above 22%” from “above 21%”.


German fertiliser supplier K+S (+23%) grew Q1 revenue to 733m, up 13% year-on-year and comfortably ahead of consensus analyst expectations of 693m. The strong sales performance was driven by improved market conditions in the agriculture industry and high demand for de-icing salt as a result of cold winter weather in Europe. Shares in the company rose as it also upgraded earnings guidance; 2021 EBITDA (earnings before interest, taxes, depreciation and amortisation) is now expected to be in a range of €500m to €600m, up from €440m to €540m.


Although Coloplast (-6.8%) reported 2% organic year-on-year growth in Q2 and raised full-year operating profit margin guidance from 31-32% to 32-33%, investors were underwhelmed and the shares slipped a touch. The improved profit guidance results from cost improvements due to Covid-19; the demand outlook for its medical devices is still heavily impacted by the pandemic.


Shares in Atlas Copco (-2.7%) eased off slightly in May despite issuing a largely upbeat Q1 report. Organic revenue growth was 13% to SKr26.0bn, while order intake rose 18% on the same basis to SKr30.5bn, well ahead of analyst forecasts of SKr28.0bn. This order growth primarily stemmed from increased demand for vacuum equipment from the semiconductor industry. As a result, the Swedish industrial tools manufacturer amended the wording of its demand outlook to predict that activity levels will remain at “the high current level”.


Positive contributors to performance included:

K+S (+23%), Pandora (+17%) and Stellantis (+16%)


Negative contributors to performance included:

Coloplast (-6.8%), Subsea 7 (-6.7%) and Atlas Copco (-2.7%)


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 31.05.21, 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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