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Liontrust GF European Strategic Equity Fund

October 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 Fund’s A4 share class returned -2.6* in euro terms in October. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned -3.6% and -1.1% respectively.

Most markets fell in October as investors grappled with ongoing inflationary pressures and adjusted to the possibility that interest rates may remain high for some time, while the unfolding crisis in the Middle East has also added a degree of geopolitical uncertainty. In Europe, the European Central Bank left its deposit rate unchanged at 4%, altering its path after ten consecutive rate hikes, though the bank did not rule out further tightening.

Sector returns were broadly negative for the period, with the exception of utilities (+0.5%) which posted a marginally positive return. The weakest sectors in the European market were healthcare (-5.4%), consumer discretionary (-5.2%), industrials (-4.8%) and financials (-4.5%).

Strong relative performance from the Fund in October was driven by its short book (c.36% NAV), with the portfolio making a positive contribution of 3.7% as the average short position dropped by more than 10%. This was partially offset by negative return from the Fund’s long book, which contributed -5.6%.

Danish jewellery manufacturer and retailer Pandora (+9.0%) rose after a positive update at its capital markets day, where the company announced new financial targets which were well received by the market. Pandora announced an EBIT margin target of 26-27% by 2026, an increase from c.25% in 2023. Furthermore, the company expects revenue to reach DKK 34-36 billion in 2026, up DKK 7-9 billion from the expectation of around DKK 27 billion for 2023.

In addition, Pandora noted the successful implementation of its Phoenix strategy which was launched in 2021 to focus on growth opportunities in brand, design, personalisation and markets, while also announcing it intends to scale up investments to accelerate revenue growth.

Novo Nordisk (+5.5%), the Danish pharmaceutical group performed positively on the announcement of the decision to stop its semaglutide kidney drug trial due to its results meeting a pre-specified efficacy criteria. Other encouraging news included the announcement of an upgrade to both sales and operating profit for 2023. Following the strength of Wegovy and Ozempic volumes, the company raised sales growth expectations from 27-33% to 32-38%, while operating profit expectations rose to 40-46% from 31-37%.

The Fund’s short position in a Swedish textile-to-textile recycling company was a notable contributor following the release of a lacklustre Q3 update, while the company also forecasted a negative impact on Q4 sales, profit and cashflow. There was also a strong contribution from a French pharmaceutical company which downgraded its outlook for the full year.

Swedish cloud-based accounting software company Fortnox (-26%) was also among the detractors, dropping on the release of its interim report to September. Analysts were disappointed with the company’s organic growth figures which amounted to 25% - Fortnox blamed the drop from 35% the previous year on generally lower activity in the market.

Despite announcing a 13.8% year-on-year increase in third quarter revenue, French carmaker Renault (-14.6%) reported a decline in sales volumes for the period versus the first half of the year, citing that dealers were opting for lower inventories. However, Renault confirmed its full-year targets, with the company expecting an operating margin of between 7-8%.

Verallia (-18%), the producer of glass packaging for beverages and food products, fell on the announcement of its results for the first nine months of the year. Despite reporting an increase in revenue, the company stated that it observed a drop in demand since August due to slowing consumption and ongoing destocking along the value chain. Following these deteriorating market conditions, Verallia announced that it would adjust production capacity as it prepares for more stable market conditions in 2024.

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








Liontrust GF European Strategic Equity

A4 Acc EUR






MSCI Europe






HFRX Equity Hedge EUR












Liontrust GF European Strategic Equity

A4 Acc EUR





MSCI Europe





HFRX Equity Hedge EUR





*Source: Financial Express, as at 31.10.23, total return (income reinvested and net of fees).

**Source: Financial Express, as at 30.09.23, 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.

Key Features of the Liontrust GF European Strategic Equity Fund 

The investment objective of the Fund is to achieve a positive absolute return over the long term for investors through a portfolio of long, synthetic long and synthetic short investments primarily in European equities and equity related derivatives. The Fund may invest anywhere in the world but will primarily invest in European companies either directly or via derivatives. The Fund may use financial derivative instruments for investment purposes and for efficient portfolio management (including hedging). The Fund will take both long and short positions in derivatives meaning the gross exposure of the Fund will typically be greater than 100% of the net asset value of the Fund. The Investment Adviser will alter the ratio of long and short exposures in the Fund depending on the Investment Adviser’s confidence in the investment process’ ability to generate returns from the short positions. Where sufficient short opportunities can be found, the Fund will have an approximately equal weighting in long and short positions. At other times, the Fund will have a net long position i.e. more long positions than short positions held in the Fund. Where investments are held in a currency other than the base currency, the exposure to currency risk may be minimised by hedging. The Fund expects to provide a positive absolute return under all market conditions over the medium to long term. However, there is no guarantee this will be achieved over this or any other time period. Income from the Fund's investments is reinvested. The Fund has both Hedged and Unhedged share classes available. The Hedged share classes use forward foreign exchange contracts to protect returns in the base currency of the Fund.
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 MSCI Europe Index and the HFRX Equity Hedge (EUR) Index (the “Benchmarks”) by virtue of the fact that it uses the Benchmarks for performance comparison purposes. The Benchmarks are 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 Benchmarks.
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.

Overseas investments may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of the Fund. The Fund may, under certain circumstances, invest in derivatives, but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. 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. The use of derivative contracts may help us to control Fund volatility in both up and down markets by hedging against the general market. The Fund may encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings. The Fund uses derivative instruments that may result in higher cash levels. Outside of normal conditions, the Fund may choose to hold higher levels of cash. Cash may be deposited with several credit counterparties (e.g. international banks) or in short dated bonds. A credit risk arises should one or more of these counterparties be unable to return the deposited cash. There is no guarantee that a positive absolute return will be generated over any time period.


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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