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Liontrust Russia Fund

Q2 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 Russia Fund returned 11.3% for the quarter, versus the MSCI Russia 10-40 Index return of 13.2%*.

Global equities had a strong quarter as the global economic recovery gathered steam, while the spread of the Delta variant and a hawkish turn from the Fed added some volatility. Commodity exporters led the way with the Russian market returning 13.2% and significantly outperforming global markets. The rally in Russian equities was driven by earnings estimates which were revised 15% higher over the quarter and are now nearly 25% higher than at the start of the year. Higher earnings revisions have been driven to a large degree by the energy sector, with estimates up 24% during the second quarter and over 60% since the beginning of the year.

Oil prices had another strong quarter rising from $63/bbl to $75/bbl. Demand continues to be robust supported by the vaccine rollout and an improving economic outlook, while supply remains disciplined. OPEC+ have prolonged their production cuts and will only gradually return spare capacity to the market. Meanwhile, US shale producers have shown uncharacteristic discipline with supply only recovering modestly following the sharp declines last year. OPEC+ will be watching this situation closely as curtailing their own production while the US ramps up supply could fuel discontent within the group and lead to an acceleration of returning the 6mbpd of spare capacity to the market. The US and Iran failed to finalise a deal prior to the Iranian presidential election, so significant sanctions relief to unlock Iranian supplies now appears unlikely in the near term. Continued robust demand and disciplined supply is likely to remain supportive of oil prices in the near term although supply side uncertainties still need to be monitored closely.

The mining sector also stands to benefit from the global economic recovery without the supply overhang seen in the oil market. However, the sector’s performance was held back in the quarter as the government introduced a 15% export duty on most metals for the remainder of the year, to be replaced by a new tax framework for next year.

On the geopolitical front, the US and Russia continue to make progress towards de-escalation which was helped by the meeting of Presidents Putin and Biden in Geneva in June. This resulted in both ambassadors returning to their foreign posts and the creation of top-level committees to address pressing issues including arms control, cybersecurity and “strategic stability”.

The market was again led by more cyclical sectors with energy and financials posting the strongest returns while utilities and consumer staples lagged. This was broadly in line with the strongest and weakest earnings revisions, respectively.

Key positive contributions came from TCS, Alrosa and Headhunter. On the other side of the ledger, notable detractors to the Fund’s performance were Tatneft, Mail.ru and Evraz. The expectation remains that 2021 will be a year of rapid recovery and that life will have more or less returned to normal by the end of the year. Although the prevailing view is that 2021 will bring us back to normality, some developments seen in 2020 will persist. Distinguishing between cyclical and structural changes is important in understanding the outlook for 2021 and beyond.

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








Liontrust Russia C Acc GBP






MSCI Russia 10/40







*Source: FE Analytics as at 30.06.21.


**Source: FE Analytics as at 30.06.21.

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Key Risks 
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
Investment in funds managed by the Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.  


This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
This 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. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
Global Fundamental

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