The Fund’s A4 share class returned -2.4%* in euro terms in April. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned 2.5% and 0.5% respectively.
Investor sentiment recovered swiftly from March’s banks-led sell-off, allowing European markets to set aside persistently high inflation and the growing prospect of another US bank failure to register a solid gain for the month. European equities are now in an uptrend as measured by the market regime indicators deployed within the Cashflow Solution process. With aggregate market valuations looking fair in Europe, our current outlook is fairly constructive, albeit tempered by the presence of somewhat concerning levels of aggressive corporate cash flow expenditure.
Style and sector considerations largely took a back seat in April, with European market gains being relatively broad based. Real estate (+7.3%) was the largest riser, bouncing back from its position as March’s biggest faller as fears over banking crisis contagion and rising borrowing costs abated. Healthcare (+4.8%), energy (+4.6%) and consumer staples (+4.3%) all participated strongly in a relatively broad based market recovery. Only IT (-4.4%) and materials (-0.3%) lost ground over the month.
With investor risk appetite driving returns more than company fundamentals, the market environment was a tough one for our moderate market exposure and bottom-up, stock-picking style based on cash flow characteristics. We believe the medium-term outlook for the strategy to be attractive, with investment opportunities in both the long book, where we expect value and momentum investment factors to continue to perform well, and the short book, which will target the worst offenders in terms of overoptimistic corporate investment.
In addition to facing a broad rise in market levels, the short book also suffered some specific setbacks as certain stocks rallied particularly strongly, including a UK e-commerce platform that received a takeover approach and a German software group whose Q1 results were very well received .
In the long book, online gaming group Betsson (+11%) was among the stronger performers. It revealed first quarter organic sales growth of 38% year-on-year to €222m despite active customers decreasing by 11% to 1.15m. The figure came in ahead of consensus analyst forecasts of €215m. The strong start to the year looks to have continued in to the second quart, with average daily revenue from 31 March to 23 April running 26% higher than a year earlier.
By contrast, French market research group Ipsos (-14%) lost ground as it announced a 2.9% year-on-year decline in first quarter revenues to €532m. The company blamed a strong comparable figure in Q1 2022, which was boosted by a post-pandemic rebound in the Americas, and a “cliff-edge” end to large covid pandemic contracts which were still a major revenue stream this time last year. Excluding these factors, Ipsos says that sales grew by 0.6%. In addition to these base effects, the recent quarter was also held back by some clients – particularly major US tech companies – delaying spending decisions due to macroeconomic uncertainty. While business in China has recovered following the end of its zero-covid policy, revenues (+3.9%) are flagging order book growth (+13%). Ipsos remains confident of hitting its full-year targets, noting that its order book is about 50% of its annual sales targets, in line with historical trends.
Q1 results from Renault (-11%) beat analyst estimates but were overshadowed by read-across from Tesla’s pledge to persist with aggressive price cuts as it looks to boost demand. Renault sold 535,000 vehicles in the quarter, 14% higher year-on-year, pushing group revenue up 30% to €11.5bn when combined with the effect of higher sales prices. The company’s order book it’s at a record level equivalent to 3.3 months’ sales. Around 38% of Renault’s European sales are now in electrified cars, leaving it exposed to margin squeeze if a price war develops.
Discrete years' performance** (%), to previous quarter-end:
Past performance does not predict future returns
|
|
Mar-23 |
Mar-22 |
Mar-21 |
Mar-20 |
Mar-19 |
|
Liontrust GF European Strategic Equity A4 Acc EUR |
7.6% |
28.9% |
28.2% |
-13.9% |
4.2% |
|
MSCI Europe |
3.8% |
9.3% |
35.3% |
-13.5% |
5.5% |
|
HFRX Equity Hedge EUR |
-4.6% |
7.9% |
22.3% |
-11.3% |
-7.8% |
|
|
Mar-18 |
Mar-17 |
Mar-16 |
|
Liontrust GF European Strategic Equity A4 Acc EUR |
0.3% |
10.7% |
-1.1% |
|
MSCI Europe |
-0.4% |
16.9% |
-13.7% |
|
HFRX Equity Hedge EUR |
5.8% |
4.0% |
-8.2% |
*Source: Financial Express, as at 30.04.23, total return (income reinvested and net of fees).
**Source: Financial Express, as at 31.03.23, total return (income reinvested and net of fees). Discrete data is not available for ten full 12-month periods due to the launch date of the portfolio (25.04.14). Investment decisions should not be based on short-term performance.
A performance fee of 20% is calculated and accrued at each valuation point. Payment is subject to the Fund's net asset value exceeding an Adjusted Prior Net Asset Value which is a High Water Mark adjusted by any new subscriptions or redemptions and a 4% hurdle per calendar year. No Performance Fee will be payable with respect to a Fund class in any Performance Period unless such class has recovered any accumulated underperformance for previous Performance Periods. Any performance fees are only payable on the positive difference between the NAV and the Adjusted Prior Net Asset Value. Details of the Fund's performance fee in the last financial year can be found in the Key Investor Information Document (KIID) which can be obtained free of charge from the Liontrust website.
Key Features of the Liontrust GF European Strategic Equity Fund
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 the Fund involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Fund may invest in emerging markets/soft currencies which may have the effect of increasing volatility.
The Fund 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.
DISCLAIMER
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.
