Liontrust China Fund

• Chinese equities rose +11.6% in Q1 2025, driven by economic stabilisation, AI optimism (e.g. DeepSeek), and government stimulus.
• China’s economy grew 5.4%, supported by pre-tariff exports and a recovering property market; fiscal deficit target raised to 4% with increased social spending.
• Tech, consumer discretionary, and healthcare sectors gained 16–20%, while energy and utilities fell. Fund performance boosted by financials and consumer discretionary holdings.

The Liontrust China Fund returned 9.8%* over the quarter, versus the IA China/Greater China sector average of 5.6% and 11.6% from the MSCI China Index (both comparator benchmarks).

Following a very strong rally through the second half of 2024, Chinese equities continued to perform well during the first quarter despite the sharply higher volatility in global equity markets that came with the inauguration of Donald Trump for his second term as US President and considerable policy uncertainty. Chinese equities rose by +11.6%, well ahead of both emerging markets (-0.1%) and developed markets (-1.8%). The rally was supported by economic stabilisation, government stimulus, and optimism around AI and tech innovation (notably DeepSeek).

China’s economy grew by 5.4% during the first quarter, likely helped by a pre-tariff rush as exporters accelerated shipments ahead of new US tariffs. However, following the stimulus measures announced last year, China’s real estate market is showing signs of recovery with existing home transaction value growing again in many cities. While property may no longer be a key driver of growth going forwards, removing the negative contribution to growth can still provide a meaningful boost to the economy. During the March National People’s Congress, China announced a fiscal deficit target of 4%, the highest in recent years, signalling increased government spending to support the economy. Policies included healthcare, pensions, and incentives to encourage higher birth rates, aiming to stimulate domestic consumption. Positive government signals toward the tech sector and new stimulus measures helped lift investor sentiment. AI and high-tech industries were key drivers of market optimism, challenging US tech dominance in some areas.

The dispersion in sector returns was again high, with the consumer discretionary, technology and healthcare sectors generating positive returns of +20%, +17% and +16%, respectively, while energy and utilities fell by 7-8%. Key positive contributions came from our holdings in the financials and consumer discretionary sectors, offset by weakness in communication services.

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

*Source: FE Analytics, as at 31.03.25, primary share class, total return, net of fees and income reinvested. 

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. This Fund may have a concentrated portfolio. 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. Investments in emerging markets may involve a higher element of risk due to less well-regulated markets and political and economic instability. This may result in higher volatility and larger drops in the value of the fund over the short term. 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. ESG Risk: In reference to any component (where applicable) of a fund's investment process that uses external ESG data, there may be limitations to the availability, completeness or accuracy of ESG information from third-party providers, or inconsistencies in the consideration of ESG factors across different third party data providers, given the evolving nature of ESG.

DISCLAIMER

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