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Liontrust Global Technology Fund

Q4 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 Liontrust Global Technology Fund returned 7.1% over the fourth quarter of the year, versus the MSCI World Technology Index’s return of 12.7% and IA Technology & Telecommunications sector gain of 4.4% (both comparator benchmarks)*.

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.

Technology focused equities had a strong quarter capping another great year. Third quarter earnings remained robust and technology companies seem primed for whatever a “post-Covid” world may look like. The exception to this remains China where the regulatory bodies seem unwilling to relent in its efforts to exert its control on their technology companies and force them towards the government agenda. This combined with fears of contagion from its housing debt crisis and the inflexible “zero covid” policy has seen Chinese tech stocks continue to underperform.

Overall, this quarter, the technology Index (MSCI World/Information Technology) outperformed the wider global equity benchmark (MSCI ACWI) returning 12.7% and 6.2% respectively.

The fund liquidity position remains very strong with a weighted average market cap of over £200bn compared to a fund size of around £130m. We have no position in a company with a market cap below the £1bn mark and stress testing indicates the fund is easily able to be liquidated in its entirety well within just 1 working day while remaining below the 20% Monthly ADV (Average Daily Volume) threshold even during periods of market stress like in March 2020.

The main detracting factor of the fund (and its peers) vs. the benchmark remains the substantial underweighting of Index heavyweights Apple and Microsoft. This is not deliberate however, as the benchmark has held these two at a combined weight of over 30% (currently over 36%), while the Fund is only allowed a maximum weighting of 10% each. Holding the maximum is also not prudent from the view of maintaining a balanced and efficient portfolio point of view, thus, despite being bullish on these stocks, we only hold them at around a 15% combined position, a 15-20% underweight that has been costly due to their continued outperformance of the benchmark.


For example, this past year alone Apple returned 34.4% and Microsoft 52.5% (in GBP), vs. 32% for the benchmark Over 5 years, Apple and Microsoft have returned 494% and 431% vs 238% for our benchmark, a substantial amount of outperformance.


Nvidia, Apple and Microsoft were the Fund’s top performers over the quarter, with other notable contributions from semiconductor company AMD +39.2% and semiconductor capital equipment manufacturers Tokyo Electron +28.7%, KLA +28.2% and Lam Research +26.0%. All benefitting from an increase in chip demand and subsequent fab buildouts and spend planned for the next few years to continue to drive this key component of the digitising economy.

On the other side of the ledger, worries over rate rises and slowing growth trends has had a large impact on some of the high-flying stocks of last year, including payments companies Block (formerly Square) and PayPal. Similarly, Twilio, after an exceptional year last year has been clipped as investors fear fading growth coinciding with a less friendly rate environment.

In terms of portfolio changes over the quarter, the fund entered positions in Applied Materials, Autodesk and CyberArk. CyberArk is a former holding and a leader in key person identity management in cybersecurity and is added to buildout our position in the cybersecurity space that we see as a long-term beneficiary of increased digital spend.

Applied materials joins our collection of successful investments in semiconductor equipment manufacturers that are benefitting from a massive ramp up in capital equipment spend announced by major fab companies looking to expand operations to keep up with fast growing demands of the digital economy. Finally, Autodesk is the leading provider of design and simulation software and provide indispensable tools to aid engineers, architects and builders.

The Fund exited Pegasystems, a CRM software provider, to raise the cash to enter into positions in promising prospects listed above.

The outlook on equity markets is cautious. Central banks look set to raise rates as they grow increasingly weary of recent inflation. Meanwhile, the long-term picture for the economy remains uncertain, with the possibility of continued cycles of Covid variants and restrictions to potentially plague us for years to come.

From an investor perspective, while increased policy rates will likely have short term negative consequences for high duration assets like fast growing technology stocks, we believe high quality companies providing vital technology goods and services continue to be a fantastic place to invest. They both benefit from, and continue to drive forward, the digitisation trends that have now remained resilient both during the height of the pandemic and continue on now. These trends include the rise of ecommerce, the shift to cloud software and cloud infrastructure, digital payments and next generation entertainment. We believe now more than ever it is important to actively seek and discern high performing companies from those whose value is more speculative and that by focussing on a company’s key financial metrics supporting a strong investment narrative and a discounted cash flow valuation we can continue to provide long term outperformance in this exciting sector through careful and attentive active management.

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







Liontrust Global Technology C Acc GBP






MSCI World Information Technology






IA Technology & Telecommunications













*Source: FE Analytics as at 31.12.21


**Source: FE Analytics as at 31.12.21. Quartiles generated on 12.01.22

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.  


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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