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Liontrust GF European Strategic Equity 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’s A4 share class returned 4.6%* in euro terms in May. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned 2.6% and 0.8% respectively.


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 (+4.6%) and financials (+3.8%) the largest risers while utilities (+0.9%) and communications services (+1.2%) were among the laggards.


The Fund experienced a very strong month, with the long book comfortably outperforming a rising market while the short book also made a positive contribution to returns.


One of the strongest positions in the long book was German fertiliser supplier K+S (+25%). It 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.


Danish jeweller Pandora (+18%) also 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%”.


Shares in 4imprint Group (+24%) moved sharply higher after the direct marketing company referred to a substantial improvement in business momentum. An AGM trading update revealed order count over the three weeks to be around 85% of the 2019 comparable, up from 65% in January and February and 80% in April.

Weaker holdings included
French caterer Elior Group (-6.2%), which announced a 22% year-on-year drop in interim sales and is likely to find its operations heavily restricted by public health measures for some time yet, and Swedish pump manufacturer Concentric (-4.7%), which has found its recovery from last year hampered by supply chain problems.


In the short book, positive contributions came from a UK IT consultancy whose shares have been weak since an April trading update; a Norwegian manufacturer of high-pressure cylinders and fuel systems that released Q1 results in May; a UK hydrogen energy specialist that suffered a broker downgrade; and a US developer of game-based learning tools whose shares have almost halved since February highs.


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







Liontrust GF European Strategic Equity
A4 Acc EUR






MSCI Europe







*Source: Financial Express, as at 31.05.21, total return (income reinvested and net of fees). Non fund-related return data sourced from Bloomberg.


**Source: Financial Express, as at 31.03.21, total return (income reinvested and net of fees).

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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 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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