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Liontrust GF UK Growth Fund

May 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 Liontrust GF UK Growth Fund returned 0.3%* in May. The Fund’s comparator benchmark, the FTSE All-Share, returned 0.7%.

May’s macroeconomic data showed further evidence of the inflationary pressures which are expected to keep mounting as the year goes on. Consumer price inflation in the UK hit 9% in April, the highest level in 40 years, while the US equivalent was 8.3%. The central bank policy response was as expected: the Bank of England raised rates by 0.25% to 1.0% and the US Federal Reserve pushed through a 0.5% hike to a target range of 0.75% to 1.0%.


Against a market backdrop of geopolitical volatility and inflation concerns, we have recently been highlighting two themes which we think will be among the most influential this year: pricing power and takeover activity.


Looking at the former through the lens of May’s newsflow, TI Fluid Systems (+13%) is among those companies hoping that product price rises will help offset the impact of cost increases. The company manufactures highly engineered automotive fluid systems and its shares have suffered from a slowdown in global vehicle production recently. However, it seems investor expectations are now at realistic levels after a Q1 trading update detailing a fall in revenues and margins. Revenue dropped 4.1% year-on-year to £755m, a modest outperformance of the 4.5% fall in global light vehicle production during the quarter. Margins also came under pressure due to inflation and production disruption. But TI Fluid Systems expects margins to improve towards the end of 2022 as cost inflation is gradually passed on in pricing.


May also provided more evidence that market volatility is leading to corporate and private equity acquirers seeking out undervalued assets. One of the Fund’s holdings, Clipper Logistics, exited the portfolio in May as we sold the position ahead of completion of the takeover by US-listed GXO Logistics.


There were also further developments on another portfolio bid situation. Last month, Baring Private Equity Asia VIII Fund announced that it was considering making an unsolicited offer for RWS Holdings (-10%), prompting the shares to rise strongly. In May, it stated that it was no longer evaluating an offer. Amid the takeover speculation and the slew of stock exchange updates required by the UK takeover code, RWS Holdings’ interim trading update in April did not gain much attention. The intellectual property services provider expects to report profit before tax of at least £60m in the six months to 30 March. This is slightly ahead of its prior expectations, following good cost synergies from its SDL  acquisition and volume-led margin expansion in its group-wide translation functions.


Another of the Fund’s holdings, Next Fifteen Communications (-18%), became involved in a potential takeover as acquirer, rather than acquiree. Since early January, marketing agency M&C Saatchi – which is not a holding in the Fund – has been the subject of takeover interest from one of its directors, Vin Murria, who is Chair of an acquisition vehicle – AdvancedAdvT Limited (also not a Fund holding) – which acquired 10% of M&C Saatchi’s shares. Unsurprisingly, M&C Saatchi’s other Board directors didn’t welcome Murria’s bid for a change of control and, in May, AdvancedAdvT took its offer hostile, approaching M&C Saatchi shareholders with an offer worth 208p, comprising either 100% AdvancedAdvT shares or 80% shares-plus-cash. M&C Saatchi’s Board rejected the offer, describing it as derisory.


A few days later, Next Fifteen Communications entered the fray, making a 247p counter-offer (40p cash with the rest in shares) which was recommended by M&C Saatchi. In recent years, Next Fifteen Communications has broadened its services from being a digital marketing specialist to offering data-driven growth consultancy. Acquisitions have formed a key part of the company’s rapid growth, but a £300m+ purchase of M&C Saatchi would represent a step-change in the pace of its transformation. Investors showed some trepidation around the deal, and the drop in Next Fifteen Communication’s share price over the month pushed down the value of its mostly-shares takeover offer, largely wiping out the premium to AdvancedAdvT’s offer. AdvancedAdvT has maintained its hostile bid at its initial level, despite Next Fifteen’s offer.


Another key factor on the month’s market returns we’ve yet to mention is the oil price. It has been trading at elevated levels since Russia’s invasion of Ukraine, and tight supply conditions led it to rise again in May. Brent crude rose 12% to almost $123 a barrel. With this tailwind, the FTSE All Share’s Energy sector was its best performing, returning 10% for the month. Driven by large rises for BP (+12%) and Shell (+10%), the sector was also the largest contributor to Fund returns.


In other portfolio news, Spirax-Sarco Engineering (-13%) slid after issuing an AGM statement, despite maintaining its full-year financial guidance. The company is an international engineer which has a dominant market position in products for regulating steam and electrical thermal energy. Although Spirax-Sarco commented that its strong order book and resilience to economic cycles stands it in good stead, its assessment of the economic backdrop was fairly downbeat. It noted that global industrial production for 2022 is now expected to be 3.9%, down from 4.2% at the time of its March release of full-year results.


Although Sage Group’s (-10%) interim revenue of £934m fell short of the analyst consensus of £958m, its results were largely robust and included unchanged full-year guidance. Of the revenue total, £866m is classed as organic recurring revenue, up 8% as Sage Business Cloud continues to grow rapidly. Sage expects organic recurring revenue to grow between 8% and 9% in 2022, with other revenue lines falling.


Positive contributors included:

TI Fluid Systems (+13%), BP (+12%), Shell (+10%), WH Smith (+9.5%) and Synthomer (+7.4%).


Negative contributors included:

Next Fifteen Communications (-18%), Spirax-Sarco Engineering (-13%), Sage Group (-10%), RWS Holdings (-10%) and Bunzl (-10%).


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

Past performance does not predict future returns.







Liontrust GF UK Growth C3 Inst Acc GBP






FTSE All Share










Liontrust GF UK Growth C3 Inst Acc GBP



FTSE All Share




*Source: Financial Express, as at 31.05.2022, total return (net of fees and income reinvested), sterling terms, C3 institutional class. Non fund-related return data sourced from Bloomberg.

**Source: Financial Express, as at 31.03.2021, total return (net of fees and income reinvested), primary class. Discrete data is not available for ten full 12-month periods due to the launch date of the portfolio (03.09.14). Investment decisions should not be based on short-term performance.


Key Features of the Liontrust GF UK Growth Fund

The investment objective of the Fund is to provide long term capital growth by investing predominantly in UK equities. The Fund invests at least 80% in securities of companies traded on the UK and Irish stock exchanges. The Fund invests predominantly in UK large and mid-cap stocks.
5 years or more.
4 (Please refer to the Fund KIID for further detail on how this is calculated)
The Fund is considered to be actively managed in reference to the FTSE All Share Index (the “Benchmark”) by virtue of the fact that it uses the Benchmark for performance comparison purposes. The Benchmark is not used to define the portfolio composition of the Fund and the Fund may be wholly invested in securities which are not constituents of the Benchmark.
Understand common financial words and terms See our glossary

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 guaranteedYou 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. 


Non-UK individuals: This document is issued by Liontrust International (Luxembourg) S.A., a Luxembourg public limited company (société anonyme) incorporated on 14 October 2019 and authorised by and regulated as an investment firm in Luxembourg by the Commission de Surveillance du Secteur Financier (“CSSF”) having its registered office at 18, Val Sainte Croix, L-1370 Luxembourg, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register under number B.238295.UK individuals: This document is issued by Liontrust Fund Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518165) to undertake regulated investment business.

This is a marketing communication. It 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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