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Liontrust Special Situations Fund

June 2021 review

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.

The Liontrust Special Situations Fund returned 0.6%* in June. The FTSE All-Share Index comparator benchmark returned 0.2% and the average return in the IA UK All Companies sector, also a comparator benchmark, was -0.2%.

 

The UK equity market added modestly to this year’s strong gains as investors waited to see whether the inflationary forces emerging from the economic recovery are likely to prompt any action from central banks. The constant uncertainty on the public health front also remains, with much debate over the interaction of the spread of new Covid-19 strains such as the delta variant and the planned removal of social restrictions.

 

One asset class that did move decisively higher was commodities. As supply chains struggle to keep pace with resurgent demand, prices for energy, basic metals and agricultural commodities have all risen substantially this year. In June, Brent crude rose a further 8% to US$75.1 a barrel, aided by Opec’s decision to restrict supply increases.

 

The FTSE All-Share Index’s energy sector was one of the strongest in the month, rising 5.8%. The Fund benefitted via its holdings in energy majors BP (+2.9%), and Royal Dutch Shell (+9.0%) but its participation in the strength was diluted somewhat by poorer performances from industry engineer John Wood Group (-10%).  An interim update showed that like-for-like revenues were down 21% on 2020 due to the impact of the pandemic. But the engineering group commented on a solid Q1 and improving momentum in Q2 while also maintaining its full-year guidance. However, some investors were disappointed that, with this description of Q2 momentum, the company’s order book had not increased by more than 6% (to US$6.9bn) over the six months.

 

Next Fifteen Communications (+15%) rose sharply after a trading update revealed an acceleration in growth that pushed performance ahead of its expectations. Revenues rose 21% year-on-year in the three months to 30 April – including 17% organic growth – and growth accelerated further at the start of Q2.

 

Currency headwinds weighed on RWS Holdings (-12%) as it issued interim results covering the six months to 31 March 2021. Although adjusted profit before tax for the six months was ahead of managements’ expectations (+53% to £51m), adverse currency trends are affecting the second half of its year. The translation and language services specialist generates a significant proportion of revenues in US dollars, but the dollar has weakened relative to sterling in recent weeks.

 

Shares in Renishaw (-11%) slid on some concern that the company’s sale process may not achieve the high price initially hoped for.

 

Craneware (-9.9%) also dipped as it announced a £140m placing to part finance the US$400m acquisition of Sentry, a leading provider of software-as-a-service solutions for pharmacy procurement. It has a customer base which includes over 600 US hospitals, only 25% of which are existing Craneware customers. The placing price of 2200p represented a 10% discount to the share’s prior level; the Fund was able to participate in the capital-raise. Craneware also updated the market on current trading, stating that it is confident in meeting market expectations for the year to 30 June.

 

Positive contributors included:

 

Next Fifteen Communications (+15%), Learning Technologies (+11%), Royal Dutch Shell (+9.0%), AstraZeneca (+7.9%) and Spirax-Sarco Engineering (+7.2%).

 

Negative contributors included:

 

RWS Holdings (-12%), Renishaw (-11%), John Wood Group (-10%), Craneware (-9.9%) and TP ICAP (-8.7%).

 

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

 

Jun-21

 

Jun-20

Jun-19

Jun-18

Jun-17

Liontrust Special Situations I Inc

24.6%

 

-7.7%

6.5%

15.3%

23.0%

FTSE All Share

21.5%

 

-13.0%

0.6%

9.0%

18.1%

IA UK All Companies

27.7%

 

-11.0%

-2.2%

9.1%

22.5%

Quartile

3

 

2

1

1

2

 

*Source: Financial Express, as at 30.06.21, 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 30.06.21, total return (net of fees and income reinvested), bid-to-bid, primary class.

Understand common financial words and terms See our glossary
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.
 
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. 

 

Disclaimer
 
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. 

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