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Liontrust GF European Smaller Companies Fund

November 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 A5 share class returned -1.4%* in euro terms in November. This Fund’s target benchmark, the MSCI Europe Small Cap Index, returned -3.2%.


For most of the month, investors continued to focus on when growing inflationary forces would prompt central bank action. While the Bank of England surprised by declining to raise interest rates at its November meeting, the US Federal Reserve confirmed it would immediately start scaling back its $120bn a month bond-buying programme. With US consumer price inflation for October later revealed to be running at 6.2%, the fastest annual pace since 1990, the re-nominated Fed Chair Jay Powell commented that it was time to retire the term “transitory” as a description of current price pressures.


But events in the final week or so were the most decisive in terms of market direction, with news of a new Covid-19 variant pushing global equity markets sharply lower. As European markets slid, only two sectors of the MSCI Europe Index stayed in positive territory in euro terms: communication services (+1.3%) and real estate (+0.5%). Energy (-6.5%) and finance (-5.6%) were the weakest sectors.


Marks & Spencer (+28%) was a standout performer as it announced half-year results showing very strong growth and upgraded its full-year guidance. In the six months to 2 October, sales rebounded 24% (to £5.1bn) from last year’s period, which was heavily affected by covid-related closures. The comparison with the prior 2019/2020 financial year is more telling. On this basis, sales still show very good growth of 5.2% while improved margin mix and operational gearing helped drive operating profit to a 35% increase to £363m. Although the company is wary of growing cost pressures, a better-than-expected start to trading in the second half of the year has given it confidence to upgrade full-year profit before tax guidance to £500m.


Although Simcorp (-14%) maintained its full-year financial guidance, its shares slipped on Q3 numbers that were moderately behind consensus estimates. Revenues rose 7.1% year-on-year to €107m, behind analyst forecasts of €107m. The company says operating profit margins are set for a larger-than-expected boost from subscription renewals and conversions. However, it cautions that the sales process continues to be adversely affected by Covid-19 restrictions on travel, resulting in postponed sales and longer timelines.


As a catering and support services provider, Elior Group (-17%) is one of the portfolio stocks to be most exposed to any lockdown measures that are imposed. Just days prior to the Omicron variant sending markets lower, the company had issued encouraging full-year results. Q4 revenues has recovered to 85% of pre-pandemic levels, up from the 73% - 74% range of the previous three quarters. For next year, the company had forecast organic growth of at least 18%, but this has immediately been overshadowed by the deterioration in the pandemic.


WH Smith (-16%) is another that is clearly exposed to any lockdown measures. The company operates retail stores on the high street and in transport hubs such as airports and rail stations. Although results showed recent trading recovering to over 80% of pre-pandemic levels, investors swiftly priced in the increased risk of fresh trading headwinds for the retail and transport sectors.


Among the portfolio’s largest positive contributors to performance, Concentric (+8.5%) consolidated on October’s very strong gains as it released in-line Q3 results, and Impax Asset Management (+20%) moved higher as investors anticipated the release of full-year results in early December.


Positive contributors to performance included:

Marks & Spencer (+28%), Impax Asset Management (+20%) and Concentric (+8.5%)


Negative contributors to performance included:

Elior Group (-17%), WH Smith (-16%), Simcorp (-14%).


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






Liontrust GF European Smaller Companies A5 Acc EUR





MSCI Europe Small Cap Index






*Source: Financial Express, as at 30.11.21, total return (net of fees and income reinvested).


**Source: Financial Express, as at 30.09.21, total return (net of fees and income reinvested). Discrete data is not available for five full 12-month periods due to the launch date of the portfolio. Investment decisions should not be based on short-term performance.

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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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