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Liontrust UK Growth Fund

January 2023 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 UK Growth Fund returned 1.2%* in January. The FTSE All-Share Index comparator benchmark returned 4.5% and the average return in the IA UK All Companies sector, also a comparator benchmark, was 4.5%.


Equity markets started 2023 strongly, helped by expectations for a softer landing and fewer interest rate rises.


Although rhetoric from central bankers remained hawkish, futures pricing suggests investors expected – in the US at least – a slightly lower rates peak, followed by rate cuts later this year. Expectations for a June 2023 peak rate began to move below 5%, while the implied rate in a year’s time fell towards 4.25%.


The IMF’s latest economic forecasts for 2023 global economic growth were revised up from 2.7% (in October last year) to 3.2%, although it expects the UK to slide into recession after cutting its forecast from 0.2% growth to a 0.5% contraction. The IMF observed that global growth has proven “surprisingly resilient”.


On the UK stockmarket, rejuvenated risk appetite saw cyclical sectors lead the market higher. Consumer discretionary (+11%) was the FTSE All-Share’s best-performing sector, followed by financials (+9.2%). Real estate (+8%) was another area of strength.


Within this environment, the Fund’s top riser was global multi-platform media company Future (+19%), which did not itself release any investor updates in January. Savills (+18%) was one of the top contributors that did update the market. Alongside other real estate-related businesses, Savills’ share price in 2022 reflected the mounting headwinds facing the property market, most notably the rapid move higher in interest rates. It was no surprise then that the shares moved higher in January as it commented it had performed ahead of its expectations for the year and well ahead of the 2019 pre-Covid comparable. Commercial transaction volumes have been hit by the large rise in cost of debt finance, but this was mitigated by unexpected strength in the prime residential market. Outside of London, Savills expects volumes to normalise in 2023 from the abnormally high post-lockdown levels it has seen but expects the London prime market to benefit from its international nature and lower dependence on mortgage finance. Rightmove (+15%) also rose amid the improved sentiment towards property stocks.

Other Fund risers included IMI (+12%) and Coats Group (+10%) but the Fund ultimately had too little cyclical exposure to keep pace with the UK market’s sharp bounce. In particular, its low weight to financials was a source of negative attribution, with the banks (+15%) sub-sector rising very strongly. 

We believe that the Fund is invested in companies which are dependable, consistent businesses in possession of barriers to competition which give them pricing power. The Fund can sometimes lag the market during periods of sharp recovery when investors re-rate more cyclical businesses, as it did this month. But we expect it to outperform over the course of the cycle, and particularly in more normalised, ‘steady state’ market conditions where companies are rewarded by investors for delivery of expectations.

The Fund’s weakest position in January was TI Fluid Systems (-11%). Between its Q3 trading update and full-year 2022 update, expectations for constant currency revenue growth slipped from “consistent with, or slightly below” global light vehicle production growth (of 6.2%) to 100 basis points below. Some of the deterioration is attributable to a negative sales impact from unexpected production shutdowns in China due to its Covid policies.

Other detractors included more defensive names like British American Tobacco (-5.7%), AstraZeneca (-5.6%), Diageo (-3.6%) and Unilever (-1.8%). Of these, Diageo is the only one to have given investors any cause for disappointment. Its interims showed a 18% sales increase to £9.4bn in the six months to 31 December, including organic growth of 9.4%. Organic volume growth was 2%, while price/mix contributed 7.6 percentage points. Although all its operating regions delivered net sales growth (+3%), investors were concerned that North America only did so through price increases; it saw a 4% contraction in organic sales. Diageo also commented that it expected the normalisation in organic sales growth – compared with last year’s double-digit levels – to continue through the second half of its financial year.


Positive contributors included:

Future (+19%), Savills (+18%), Rightmove (+15%), IMI (+12%) and Coats Group (+10%).


Negative contributors included:

TI Fluid Systems (-11%), British American Tobacco (-5.7%), AstraZeneca (-5.6%), Diageo (-3.6%) and Unilever (-1.8%).


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

Past performance does not predict future returns







Liontrust UK Growth I Inc






FTSE All Share






IA UK All Companies












*Source: Financial Express, as at 31.01.23, total return (net of fees and income reinvested), bid-to-bid, institutional class.

**Source: Financial Express, as at 31.12.22, 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 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.

Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market. These stocks may be less liquid and the price swings greater than those in, for example, larger companies. 


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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