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Liontrust European Dynamic Fund

October 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 6.8%* in sterling terms in October. The MSCI Europe ex-UK index comparator benchmark returned 4.3% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 4.8%.


The chance to focus on Q3 earnings season provided a welcome break from a fairly bleak geopolitical and macroeconomic backdrop. Although the UK political scene saw huge upheaval, European events were more muted by recent standards, with the European Central Bank’s latest policy decision gaining most attention. However, the decision to enact a second consecutive hike of 75 basis points was as expected and priced in by markets.


With company newsflow to the fore, the MSCI Europe ex-UK index was able to register a solid bounce from this year’s losses. From a sector perspective, the market rally showed a cyclical tilt, with only consumer staples (-2.0%) in negative territory in sterling terms. Energy (+11%) was the biggest riser. After four consecutive down months, the oil price began edging back up towards $100 a barrel again as Opec reduced its production target by 2 million barrels a day. Industrials (+8.3%), finance (+7.0%) and materials (+5.5%) also recorded large gains.


The batch of quarterly earnings releases had a mixed impact on the portfolio. Among the gainers, Rexel (+14%) upgraded 2022 financial guidance for the second time this year after sales growth accelerated in Q3 to 16% year-on-year on a same-day basis. This increase reflects a pass-through of rising production costs as well as 750 basis points of positive volume effect. The French distributor of electrical equipment says it is experiencing higher demand for electrification as a result of high energy prices. It has raised its full-year same-day sales growth guidance from 7% - 9% to around 12%, while its operating profit margin is expected to be 7.2% (compared with 6.7% previously).


French media agency Publicis Groupe (+14%) also rose after reported Q3 growth of 24%, including 10 percentage points of organic expansion as it experienced good growth across all regions. The company upgraded 2022 guidance, with organic growth of 8.5% expected compared with 6% - 7% previously. Operating margin is now expected to be at the top of its prior 17.5% - 18.0% range, while free cash flow is expected to be close to 1.6bn rather than the 1.5bn previously targeted.


On the other hand, metals mining group Boliden (-9.6%) lost ground. It has been benefitting from high prices this year, and its latest quarterly revenues rose 28% to SKr21.8bn while adjusted operating profit jumped 80% to Skr4.5bn. However, the results were slightly short of analyst expectations and the shares slid as a result.


Heineken (-7.9%) also slid despite reporting robust quarterly growth. Organic net revenue growth of 20% took revenue to €7.8bn as beer volume rose 8.9%. All regions contributed to the growth, but Asia Pacific in particular had a strong post-Covid recovery. However, investors took note of a downbeat outlook comment; the company said it is increasingly cautious on the macroeconomic outlook, which includes signs of softness in consumer demand. 


As expected, Roche (-2.0%) pharmaceuticals division struggled for impetus as Covid-19 sales dropped away, with sales flat at last year’s level. Overall, including a good performance from its diagnostics unit, sales in the first nine months of 2022 rose 2% at constant exchange rates to SFr47.0bn, below analyst expectations. Roche confirmed its full-year target of flat sales or low single-digit growth.


Away from earnings releases, Dassault Aviation (+26%) rallied strongly on hopes of progress in negotiations between it and Airbus regarding the Future Combat Air System. The cooperative development between France, Germany and Spain had reportedly been held up by tensions between the two over the scope of their roles in the programme.


Positive contributors to performance included:

Dassault Aviation (+26%), Rexel (+14%) and Publicis Groupe (+14%).


Negative contributors to performance included:

Boliden (-9.6%), Heineken (-7.9%) and Roche (-2.0%).


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

Past performance does not predict future returns







Liontrust European Dynamic I Inc






MSCI Europe ex UK






IA Europe Excluding UK












*Source: Financial Express, as at 31.10.22, 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 30.09.22, total return (net of fees and income reinvested), bid-to-bid, primary class.

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.

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.

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