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Liontrust European Growth Fund

January 2022 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 -2.5%* in sterling terms in January. The MSCI Europe ex-UK index comparator benchmark returned -5.3% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was -6.3%.


In early January, minutes from the US Federal Reserve’s December meeting served notice of its intention to raise rates sooner and faster than had been expected and to scale back its balance sheet. After data showed that US consumer price inflation rose to 7%, Fed Chair Jay Powell later confirmed that the Fed would plan to raise rates in March and finish quantitative easing in the same month. Vitally, he also indicated – or refused to rule out – the possibility of raising rates at every policy meeting in 2022 or raising rates by increments greater than 25 basis points.


While bond yields rose, the effect of higher rate expectations on equity markets was to further catalyse the rotation from growth to value. The MSCI Europe ex-UK Value Index outperformed the MSCI Europe ex-UK Growth Index by nine percentage points in January. The value rally has now been in position long enough that momentum has migrated from high forecast growth stocks to value stocks – a meaningful signal of regime change.


The valuation dislocation in markets currently is very significant, and we think there is still more to come from the value rally as it evolves in nature.


The value rally towards the end of 2020 was a fairly indiscriminate deep contrarian value rally, as a number of stocks had become oversold on Covid-19 concerns. But this transitioned during 2021. We now think it is preferable to invest in cheap stocks where there is clear evidence of recovery – as distinct from a deep value stock where there is no evidence of recovery. As a result, we have shifted the emphasis of our stock selection from the contrarian value secondary score towards the other three scores: recovering value, cash return and momentum.


In January, the Fund’s value positioning helped it outperform the European market’s fall. Lundin Energy (+14%), TotalEnergies (+13%) and Tethys Oil (+6.7%) offered some participation in an energy sector that was by far the strongest area of the MSCI Europe ex-UK Index, up 9.9% as the Brent crude oil price rose 17%. Other sources of value strength included potash manufacturer K+S (+10%), electricals and plumbing distributor Rexel (+10%), and steel wire specialist Bekaert (+5.0%). The Fund’s financials exposure also fared well during the sharp value rally; Bank of Ireland (+19%), Société Générale (+7.7%) and BNP Paribas (+3.2%) rose.


Danish medical devices specialist Coloplast (-17%) and semiconductor manufacturer ASML (-16%) were the two holdings most exposed to the market rotation. Both fell substantially despite Coloplast issuing solid Q1 results at the end of the month and ASML publishing Q4 results which included an outlook for 2022 sales growth of 20%. Epiroc’s (-16%) share price weakness also looked disproportionate to earnings newsflow. Q4 results showed a 14% year-on-year revenue increase and a 25% uplift in orders for its mining and construction equipment.


Positive contributors to performance included:

Bank of Ireland (+19%), Lundin Energy (+14%) and Total Energies (+13%).


Negative contributors to performance included:

Coloplast (-17%), ASML (-16%) and Epiroc (-16%).


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


Past performance does not predict future returns







Liontrust European Growth I Inc






MSCI Europe ex UK






IA Europe Excluding UK













*Source: Financial Express, as at 31.01.22, 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 31.12.21, 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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