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Liontrust European Growth Fund

October 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 3.3%* in sterling terms in October. The MSCI Europe ex-UK index comparator benchmark returned 2.9% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 2.1%.


The macroeconomic picture remained very similar in October. Energy prices remained elevated, contributing to inflationary pressures; Brent crude, for example, moved above $86 a barrel late in the month, its highest level for around seven years.


The US 5 year breakeven index – the inflation expectation priced into the spread between conventional and inflation-linked government bonds – rose by around 40bps in October to almost 3%. Together with global supply chain problems, this is contributing to inflationary trends which are putting central banks under pressure to act.


However, global equity indices show little sign of investor nervousness over the macroeconomic backdrop, with many of them at or near all-time highs. The MSCI Europe ex-UK Index notched up a 2.9% monthly gain in sterling terms.


There was little discernible pattern to the European market’s sector returns, with the performance table bookended by utilities (+6.4%) and communications services (-4.6%) – two of the most typically defensive areas. There was some evidence of strength in growth-style equities relative to their value counterparts, but the Fund – which has a heavy value tile currently – still recorded a good performance relative to the market in October.


At the company level, the major macroeconomic concerns showed through strongly in newsflow, with a host of Q3 reports referring to supply chain difficulties. This was true of the companies held in the Fund, although there was a wide range in the level of disruption experienced.


Epiroc (+18%) was still able to register very good gains on the back of its Q3 report despite referring to mounting supply chain issues on both inputs and completed orders. The Swedish company has seen very strong demand for its mining equipment, as good aftermarket demand and several large orders drove a 24% organic increase in orders received. Q3 revenues rose at slower pace of 11% year-on-year on an organic basis. Investors responded positively to Epiroc’s statement that it expects demand – both equipment and aftermarket – to remain at “a high level” in the near term.


By contrast, Finnish plumbing and water infrastructure company Uponor (-3.8%) slid as it blamed supply shortages of raw materials and components for reduced profitability despite strong client demand. Q3 net sales rose 8.1% in organic constant currency terms but operating profit dropped 23%.


ABB (-3.1%) also bemoaned tight supply chain conditions, saying they constrained its ability to benefit from high Q3 demand. The Swedish electrification, robotics and automation specialist announced that orders rose 26% on a comparable basis to $7.9bn, but revenues growth was restricted to 4%. It expects the problems to continue into Q4 and consequently downgraded its 2021 revenue growth forecast from just below 10% to a range of 6% - 8%.


Another notable Q3 update came from Italian clothing retailer Moncler (+15%), which experienced a marked acceleration in Q3 sales that exceeded its expectations. Sales rose by 33% in the quarter compared with 2019 pre-pandemic levels. The growth was boosted by particularly high growth in its direct-to-consumer channels in China, Korea and the US.


Positive contributors to performance included:

Epiroc (+18%), Moncler (+15%) and Pandora (+13%).


Negative contributors to performance included:

ISS (-7.3%), Uponor (-3.8%) and ABB (-3.1%).


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 31.10.21, 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 30.09.21, 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.
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. Some of the Funds may invest in derivatives. The use of derivatives may create leverage or gearing. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead. Some of the funds may hold 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.


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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