Liontrust Special Situations Fund August 2021 review | Insights

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 Special Situations Fund returned 4.0%* in August. The FTSE All-Share Index comparator benchmark returned 2.7% and the average return in the IA UK All Companies sector, also a comparator benchmark, was 3.2%.

The macroeconomic backdrop for markets was little changed during August. The highlight was perhaps Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole summit in which he indicated that the US central bank could start tapering its asset purchasing programme.

The busy reporting period continued into August, with more holdings issuing updates on trading. Real estate advisor Savills (+19%) reported on a record performance during the first six months of 2021. The group said that trading had been better than expected with residential markets and commercial transactions boosted by improving sentiment and the completion of delayed transactions from the previous year. Overall, revenue increased 18% year-on-year and underlying profit rose substantially to £66.1m from £13.2m in the same period last year. Despite some expectations of higher costs and a moderation in market sentiment, Savills expects its full-year results to be meaningfully ahead of its previous expectations.

Next Fifteen Communications (+16%) was another holding to report that trading had been ahead of expectations for the first half of its financial year ending 31 January 2022. In the three months to July 2021, the group saw revenue expand by 40% with organic growth of 29%. All areas of the business saw growth, with Customer Delivery remaining the top performer while its most recent acquisition Blueshirt Capital Advisors began trading positively. In the second half of the year, organic growth is anticipated to moderate due to strong year-on-year comparables but it is still expected to be ahead of previous guidance for the year as a whole.

Among the Fund’s fallers in August was Hargreaves Lansdown (-7.6%) after its results for the year to end-June 2021 fell short of consensus forecasts. Pre-tax profit fell 3% to £366m versus the market estimate of £381m, while net business inflows were £8.7bn compared to the £9.1bn consensus estimate. The digital investment platform said it saw a spike in trading volumes due to lockdowns and greater public interest in financial markets; however, this is expected to ease going forward.

Actuator manufacturer Rotork (-6.8%) saw its shares drop after Chief Executive Kevin Hostetler announced his departure. He will step down in June 2022 following three years at the helm. Alongside the announcement, Rotork reported solid interim results for the first half of 2021; revenue rose 1.8% and adjusted operating profit rose 2.4%.

Clipper Logistics’ (-3.1%) shares have performed very well in the year-to-date and the release of its full-year results at the end of August saw some profit taking. The specialist in e-retail and returns management logistics recorded a 39% increase in revenue for the 12 months to end April 2021. Underlying EBIT (earnings before interest and taxes) rose 52% and pre-tax profit was up 34%. It added that its new financial year had started strongly and in line with recently upgraded guidance.

Aggreko exited the portfolio after the completion of its £2.3bn takeover by I Squared Capital Advisors and TDR Capital.

Positive contributors included:

Savills (+19%), JTC (+19%), Next Fifteen Communications (+16%), RWS Holdings (+15%) and Kainos Group (+14%).

Negative contributors included:

Hargreaves Lansdown (-7.6%), Rotork (-6.8%), Iomart Group (-6.0%), GlobalData (-5.7%) and Clipper Logistics (-3.1%).

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 31.08.21, 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.

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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.

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.