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Liontrust SF Managed Growth Fund

Q4 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 0.9% over the quarter, underperforming the IA Flexible Investment sector average of 2.5% (which is the comparator benchmark)*.

2022 has been the most challenging year since the inception of the Sustainable Future range of funds in 2001. We are continually challenging our conviction in our companies, and we are pleased with how our portfolio companies are navigating an extremely difficult period where supply chains have been disrupted and customer demand has been extremely difficult to forecast. So, despite the sharp decline in valuation multiples, we remain confident in the Fund’s prospect over the next five years with sustainable growth drivers, high quality companies and attractive valuations.

A legitimate challenge to our approach would be to ask whether our sustainable investment themes have run their course. This would only be the case if we had solved every problem and satisfied every need; we are a long way from that! There is still plenty of growing to do for sustainable companies.

We are now operating in a very different environment to the past decade, with higher interest rates in place to try and contain runaway inflation. This abrupt change in macroeconomic backdrop has sent markets into a tailspin, with all asset classes falling to a greater or lesser extent in response to a higher cost of capital. Our job in these turbulent times is to focus resolutely on the long term and on our investment process which has delivered strong performance until the past year.

We also want to take the opportunity in these periods of extreme market dislocation to add to our holdings with the most conviction and highest risk-adjusted upside, as well as take the opportunity to buy businesses we have long admired but were not previously attractively valued.

Looking at our top performers over Q4, Intuitive Surgical is once again leading the way. Held under our Enabling innovation in healthcare theme, Intuitive Surgical is committed to advancing patient care in surgery and other acute medical interventions. The company is focused on innovating to enable physicians and healthcare providers to improve the quality of and access to minimally invasive care, with Intuitive’s products all relating to minimally invasive robotic surgery, a clear growth theme with better outcomes for patients.

Over the quarter, Intuitive Surgical posted strong third quarter results and lifted its forecast for procedure growth this year. The company announced Q3 revenue of $1.56 billion, an increase of 11% compared with last year’s comparable, driven by volume growth for its da Vinci surgical system procedure, though this was partially offset by a decline in system placements.

Announcing strong Q3 results was Swedish investment platform Avanza Bank, which is held under our Saving for the future theme. Avanza is an investment platform helping people save for their retirement in a cost-effective manner. The company is particularly proactive on sustainable investment, which it offers as default options that users can opt out of. Despite a fall in the value of assets on the platform, and thus a fall in its platform fees, the company is now benefitting from higher interest rates which it earns on uninvested cash.

Ringkjoebing Landbobank (Rilba) is a long-term outperformer and was again among the notable contributors over the fourth quarter. The company is exposed to our Increasing financial resilience theme, a theme we believe is crucial to ensuring a stable economy. You only have to go back to September 2008 to see the impact that weak financial institutions, inadequate regulation and supervision, and a lack of transparency had on the global economy. Businesses that provide simple products that consumers need, like current accounts and mortgages, contribute to a more resilient financial system – we believe Rilba, as one of the best-run banks in the industry, is  doing just that.

The Danish bank performed strongly into the close of the year after raising its pre-tax profit forecast for the full year at the start of December; it now sees profit between Dkr1.70 billion to Dkr1.95 billion, compared with Dkr1.55 billion to Dkr1.80 billion previously. The company cited the primary reasons behind this upward adjustment as continued levels of positive activity, higher interest rates and growth in lending for the first three quarters of the year.

Danish wind turbine manufacturer, Vestas Wind Systems, a recent addition to the portfolio, was also among the top performers despite cutting its 2022 forecast in Q3 results, as upbeat pricing comments overshadowed profit margin pressures. Exposed to our Increasing electricity from renewable sources theme, the Danish wind turbine manufacturer highlighted that while the energy crisis incentivises a faster transition to an energy system built on renewables, project development remains impeded by uncertainties in the energy market and red tape.

Advanced Drainage Systems was among our weaker names over the period after cutting its net sales guidance for the full year. It expects net sales of between $3.10 billion - $3.20 billion, a drop from the previous guidance of $3.25 billion - $3.35 billion. At the start of the fourth quarter, the company began to see the impact of the uncertain macroeconomic environment in isolated pockets across some regions and product lines. In particular, its infiltrator and retail businesses began to feel the impact of channel destocking as well as some project slowdowns within its non-residential business.

After reporting earnings and revenue that were below average estimates, Google parent company Alphabet was among the notable detractors over the quarter. Held under our Providing education theme, Google is providing access to knowledge that most users get for free. You can essentially learn anything through searching on Google and watching videos on YouTube. This simply was not possible before Google existed; you had to be rich and own a library or have access to the best teachers.

Alphabet’s Q3 sales of $57.3 billion underwhelmed, while net income was $1.06 per share, again below the average estimate. As spiralling inflation crimps growth in digital advertising, Google and competitors are fighting for smaller budgets. Around the same time as Alphabet’s release, Snap Inc. reported its slowest quarterly sales growth ever, which sent its stock plunging and dragged down the share price of Alphabet too. Accompanying the news, Alphabet said it would slow hiring and control expenses, signalling that it was preparing for tough times ahead as the economy falters.

Shares in PayPal also fell as the company trimmed its forecast for annual revenue amid a slowdown in spending volume on its platform. Payments volume increase 14% to $337 billion in the third quarter, which was below the average estimates. PayPal now expects revenue for the year to increase 10% to $27.5 billion, which is a downgrade of an earlier forecast of $27.8 billion. In response, the company has vowed to reduce expenses – including job cuts and the shuttering of offices across the US – which it has said will result in $900 million in savings this year and $1.3 billion next year.

In terms of portfolio changes, we initiated a position in Alcon under our Enabling innovation in healthcare theme. Alcon is an American-Swiss medical device company specialising in design and manufacture of interocular lenses, consumables used in ophthalmic surgery and consumer contact lenses.

We also opened a position in US firm Trex under our Delivering a circular economy theme. Trex manufactures non-wood decking and railing products from waste-wood fibres and recycled plastic, upcycling 400 million pounds of plastic each year from post-consumer and post-industrial. Although the products mimic wood, they require less maintenance and last longer. 

We sold our holding in Cellnex Telecom. Our belief is that the consolidation of the European telecommunication tower market is nearing the end of the road, with fewer options left in terms of acquisitions. This is coupled with higher valuations and increased costs of debt all of which we believe could result in reducing returns on capital.

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


Past performance does not predict future returns








Liontrust Sustainable Future
Managed Growth 2 Acc






IA Flexible Investment












*Source: FE Analytics, as at 31.12.22, primary share class, total return, net of fees and income reinvested.

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 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 the Fund involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates.


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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