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Liontrust Diversified Real Assets Fund

Q1 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.
  • Core infrastructure was the biggest detractor to performance in Q1, followed by core property
  • Cyclical real assets also weighed on performance in Q1
  • Diversifiers were largely flat in a difficult period for the fund

Over the three months to 31 March 2024, the Diversified Real Assets Fund (the ‘Fund’) returned -6.2%, (Class A accumulation share class, net of fees).1

Within core infrastructure, which was the largest detractor to the Fund’s performance in Q1 2024, social infrastructure weighed heavily. In particular, this was driven down by our holding in Cordiant Digital and to a lesser degree, HICL Infrastructure. Renewable infrastructure holdings also had a negative impact over the three months to the end of March.

Core property also contributed negatively to the Fund’s overall performance, due to the weakness of the speciality REITs sub sector, and our holdings in Supermarket Income REIT and Primary Health Properties which both dragged. The losses in this sub-area were somewhat offset by small gains in industrials, thanks to our holding in LondonMetric Property.

Cyclical real assets dragged slightly on performance, due to a negative contributon to performance in global infrastructure equity caused by our holding in RWE AG.

However, in what continued to be a difficult period economically, diversifiers remained largely flat, with gold showing a small positive return due to our holding in iShares Physical Gold.


The market has been aggressively resetting its expectations regarding interest rates cuts going into 2024, with the result being rising government bond yields across the developed markets. Part of this is driven by strong economic data, specifically jobs data, but also stickier core inflation which is meaningfully lower than 2023 but above central bank targets.

As interest rates have been the primary driver of risk and returns for the last 12 months, they will continue to drive risk and volatility – however for real assets, the higher interest rate environment is arguably already reflected in the discounts in their share prices, which in many cases remain the cheapest levels since the global financial crisis.

In terms of our positioning, we remain overweight in specialist real estate sectors that either provide defence in an economic slowdown (e.g. health care REITs) or are supported by structural themes that support supply demand dynamics (e.g. data centre REITs). We similarly remain overweight social infrastructure due to their attractive valuations and defensive characteristics while the dividend yields and inflation sensitivity make renewables still attractive to own.

We expect both the historically cheapest valuations and the interest rate catalysts to drive strong positive returns over the next 12 to 24 months (albeit it will not all come in a straight line). The Fund remains at the cheapest level valuation (P/E, dividend yield) since its inception, with a current running yield close to c.6%.

Furthermore, the first quarter has also seen much more aggressive corporate activity in the form of share buybacks to support share prices, disposal of selective asset(s) at premium to book values either to reduce leverage or recycle the capital into more profitable projects. We believe the fundamental catalysts of our companies remain supportive with robust balance sheets, so given the current running dividend yield investors are paid to be patient for a more favourable macro to unlock the capital appreciation across our names.

We believe that for most clients owning a diversified portfolio which contains defensive real assets alongside their traditional equities and bonds can provide a good source of diversification, especially in an economic and earnings slowdown scenario.

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. Bonds are affected by changes in interest rates and their value and the income they generate can rise or fall as a result; The creditworthiness of a bond issuer may also affect that bond's value. Bonds that produce a higher level of income usually also carry greater risk as such bond issuers may have difficulty in paying their debts. The value of a bond would be significantly affected if the issuer either refused to pay or was unable to pay. This Fund may have a concentrated portfolio, i.e. hold a limited number of investments or have significant sector or factor exposures. If one of these investments or sectors / factors fall in value this can have a greater impact on the Fund's value than if it held a larger number of investments across a more diversified portfolio. 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. Outside of normal conditions, the Fund may hold higher levels of cash which may be deposited with several credit counterparties (e.g. International banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash. Counterparty Risk: any derivative contract, including FX hedging, may be at risk if the counterparty fails.


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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