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Liontrust Balanced Fund

Q4 2021 review

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 Liontrust Balanced Fund returned 6.7% over the quarter, versus its average peer in the IA Mixed Investment 40-85% Sector, which returned 2.7%*.

The Liontrust Balanced Fund invests in high quality growth stocks that we believe can future proof your portfolio using the 5 key drivers of Science, Intellectual Property, New Deep Technology, Positive Social Change and Entrepreneurial Vision. The portfolio is driven by large and mega cap stocks and does not have direct holdings in small and mid-cap stocks. Over the third quarter, this focus on the aforementioned 5 key drivers has helped the Fund outperform its average peer in the IA Mixed Investment 40-85%, as well as outperforming the MSCI AC World Index. We continue to believe that active and disciplined stock selection can deliver sustained outperformance, shown by the long-term performance of the Fund, which has returned 1085.5% since its launch versus the IA peer group 228.5%.


Global Equities had a strong end to the year, blunted modestly by the spread of the latest Covid-19 variant (Omicron) towards the end of December, prompting more restrictions and a push for a vaccine booster. Inflation concerns remain front of mind with central banks now weighing up the number and extent of interest rate raises coming in the next 12 months, sending some jitters through the market, particularly to higher growth stocks.


Nvidia was the top performer over the quarter from a stock perspective. The company continued its incredible share price rise over the final quarter of the year after announcing its third quarter results, while also benefitting greatly from an increase in chip demand. Revenue rose to a record $7.1bn, or a 50% growth rate from a year earlier. The company’s data centre revenue accelerated 55% to a record $2.94bn, and gaming revenue increased by 42%, also at a record of $3.22bn. Adjusted earnings per share came in at $1.17, which was 60% over the same period last year. Looking ahead, the company announced it is now estimating Q4 revenue of $7.4bn, which is above the average estimate.

Microsoft a significant contributor over the quarter after the company’s cloud-based software helped drive robust sales and profit growth, which was ahead of estimates. Revenue in the first quarter ending 30th September climbed 22% to $45.3 billion, with profit excluding a tax gain rose to $2.27 a share, again ahead of the average estimate. In addition, sales of Azure and other cloud services increased 50% in the recent period, just shy of the 51% rate in the prior quarter. Sales of Office 365 to business customers rose 23%, as demand for advanced features pushed more customers to the pricier subscriptions.

Alphabet has been an ever present in our top performers over the year and the company’s shares continued to grind upwards over the quarter, with the market remaining positive on Google’s ability to pick up business as the economy reopens and withstand potential regulatory changes. Announcing Q3 profits and earnings above analysts’ estimates, CEO Sundar Pichai said he highlighted a vision to become an AI-first business five years ago and latest results show how the company is building more helpful products for people and partners, with ongoing improvements to Search for example.

Intuit was another strong performer over the quarter. The US financial software company rose after reporting strong quarterly results and raising its annual guidance. Intuit reported fiscal first-quarter earnings of $228 million, on sales of $2.01 billion, up from $1.32 billion a year ago. The company also added more than $1 billion to its revenue guidance for the full year, crediting the $12 billion acquisition of MailChimp, which was finalised on 1 November, as well as last year’s purchase of Credit Karma, which reported record quarterly revenue of $418 million.

On the other side of the ledger, PayPal was amongst the detractors over the fourth quarter. The company’s shares remained volatile, having issued revenue guidance for Q3 short of Wall Street targets, but this should be seen in the context of considerable growth over the last five years.

Also among the detractors for the period was Block (formerly Square Inc), with the digital payments company reporting disappointing third quarter sales. While overall sales were up 27% from a year earlier to $3.8 billion, this was below the average estimate. In addition, gross profit, which includes fees taken from Square’s Cash App and Seller businesses, was $1.1 billion in the period, an increase of 43% from a year earlier, but little changed compared with the second quarter.

We continue to be very positive on the outlook for quality growth stocks over the coming years. We are especially positive as the large and mega cap area of the market continues to give considerable scope for outperformance as the world continues to recover from the Covid-19 pandemic. Our emphasis on the drivers of Science, Intellectual Property, New Deep Technology, Positive Social Change and Entrepreneurial Vision will, we believe, guide the Fund towards those companies that will change the world as we adapt going forward.

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

 

 

Dec-21

Dec-20

Dec-19

Dec-18

Dec-17

Liontrust Balanced C Acc

16.5%

20.2%

14.7%

-1.0%

13.5%

IA Mixed Investment 40-85% Shares

10.9%

5.3%

15.8%

-6.1%

10.0%

Quartile

1

1

3

1

1


*Source: FE Analytics as at 31.12.21


**Source: FE Analytics as at 31.12.21. Quartiles were generated on 07.01.22

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.
 
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.  

 

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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