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Liontrust GF European Strategic Equity Fund

February 2024 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 4.4%* in euro terms in February. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned 1.9% and 1.2% respectively.

The European market advanced in February, led by strong performance from consumer discretionary (+7.8%), information technology (+6.5%) and industrials (+6.4%) sectors, following a number of robust company earnings updates. On the other side of the ledger, real estate (-7.0%), utilities (-5.4%) and consumer staples (-2.8%) were among the market’s poor performing sectors. The European Central Bank maintained its stance on interest rates, with President Lagarde downplaying the chances of imminent cuts, reiterating that the bank does not want to run the risk of reversing any cuts they do make.

The Fund’s long book performed strongly once again, returning 5.1% ahead of the MSCI benchmark return. Although averaging around 32% of NAV for the month when European equities rallied solidly, the short book only offered a negligible headwind to returns, with the average position recording an almost flat return over the month.

Norwegian defence group Kongsberg (+25%) was the long book’s top performer in February following the release of robust Q4 earnings. The company reported a fourth quarter operating revenues increase of 26%, with all areas of the business contributing to the strong growth.

Hermes International (+18%) rose after the French luxury design house reported strong sales for Q4, while also announcing plans of price hikes. Hermes reported better than expected sales for the final quarter of the year of €3.36 billion, marking an 18.5% increase at constant exchange rates, despite the high comparator previously reported sales in America and Asia. The company subsequently announced that it intends to increase global prices by 8% - 9%, expressing strong confidence in the Chinese market.

Sweden-based Fortnox (+25%), which offers internet-based business applications, rose sharply following the release of its Q4 and full year results. The company reported an increase in operating profit for both the quarter and full year, with 2023 seeing an increase of SEK 208 million. Analysts also noted that Fortnox was able to add 16,000 new customers over the fourth quarter, ahead of consensus estimates of 13,000.

Within the Fund’s long book, Bytes Technology Group (-15%) fell sharply on the news that its CEO tendered his resignation with immediate effect, after notifying the board that he made trades in company shares that hadn’t been disclosed to the market. Online gambling company Betsson (-9.4%) slumped after the company’s strong performance towards the end of 2023 was overshadowed by a softer start to the year.

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

 

 

Dec-23

Dec-22

Dec-21

Dec-20

Dec-19

Liontrust GF European Strategic Equity A4 Acc EUR

1.4%

18.3%

32.9%

-10.0%

23.2%

MSCI Europe

15.8%

-9.5%

25.1%

-3.3%

26.0%

HFRX Equity Hedge EUR

4.7%

-5.2%

11.0%

2.9%

8.5%

 

 

Dec-18

Dec-17

Dec-16

Dec-15

Liontrust GF European Strategic Equity A4 Acc EUR

-7.1%

4.2%

4.8%

6.1%

MSCI Europe

-10.6%

10.2%

2.6%

8.2%

HFRX Equity Hedge EUR

-12.3%

7.8%

-1.7%

-3.1%

 

*Source: Financial Express, as at 29.02.24, total return (income reinvested and net of fees).

**Source: Financial Express, as at 31.12.23, 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)

Active
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
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.

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.

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.

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