Liontrust GF European Strategic Equity Fund

• Volatility and uncertainty spike after US tariffs announcement, with corporate newsflow often overshadowed by macroeconomic worries.
• Belimo Holding tops the long book after raising full-year guidance, with price increases mitigating the cost impact of tariffs.
• Weaker sentiment towards discretionary spending sees promotional products supplier 4imprint and jewellery retailer Pandora lose some gourd without issuing updates.

The Fund’s A4 share class returned -0.9%* in euro terms in April. The Fund’s comparator benchmarks, the MSCI Europe Index and HFRX Equity Hedge EUR Index, returned -0.8% and -0.2% respectively.

Market volatility spiked in response to Donald Trump’s ‘Liberation Day’ tariff announcement, with an equity market rout in the first week followed by a steadier recovery through the remainder of the month after news of a 90-day pause on most tariffs.

The VIX index of implied volatility on the US market jumped from a little over 20% at the start of April to peak at 52% mid-month – a pattern reflective of investor activity and mood across global markets.

Given that most threatened tariffs remain on pause, it’s difficult to know what the ultimate policy outcome will be and how that will impact markets in the medium term. In the meantime, it is likely that market turbulence and volatility will continue.

We will only seek to analyse the impact of tariffs through the framework of our investment process, which in the first instance screens companies based on quantitative cash flow measures. The reverberations of this tariffs shock will, however, take time to manifest itself in our data.

While not evident at this point, if our data starts to point towards significant market dislocation then we will look to position the portfolio to reflect this. The investment process has a strong historic record of identifying such bouts and adjusting exposure accordingly.

With the outlook for global trade and growth weakening in light of the new tariffs, the oil price tumbled from around $75 a barrel at the start of the month to end April close to $63. The energy sector was easily the weakest in the MSCI Europe index over the month, falling 15% in euro terms, and there was further evidence of cyclical weakness as consumer discretionary (-3.2%) and materials (-0.8%) lost ground.

Over April, portfolio returns were largely reflective of an environment where macroeconomic and political uncertainty took prominence over corporate newsflow. There was also some sign of weak sentiment towards discretionary spending, with, for example, promotional products supplier 4imprint (-15%) and jewellery retailer Pandora (-7.8%) dropping without issuing trading updates. Equally, more defensive stocks such as support services contractor Serco (+9.2%) found share support.

However, the long book’s top riser – Belimo Holding (+32%) – did issue a Q1 update which lifted investor spirits, updating on strong Q1 trading and raising full-year guidance. The HVAC (heating, ventilation & air conditioning) actuator manufacturer grew sales by 21.8% in local currency terms – a rate which surpassed projections in all regions but particularly the Americas. The company is now projecting a 15% to 20% sales growth range for 2025 as a whole, with operating margins expected to exceed 20% (vs prior guidance of 8% - 20%). Belimo states that it will implement price increases to fully mitigate any cost impact of new tariffs.

The best performing short positions included a Norwegian warehouse automation company which reported Q1 sales well short of expectations as customers delayed or deferred investments and a Swiss chocolate manufacturer which lowered sales guidance due to the impact of tariffs and higher cocoa prices.

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

*Source: Financial Express, as at 30.04.25, total return (income reinvested and net of fees). 

**Source: Financial Express, as at 31.03.25, total return (income reinvested and net of fees). Investment decisions should not be based on short-term performance.

KEY RISKS

Past performance does not predict future returns. You may get back less than you originally invested.

We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.

The Funds managed by the Cashflow Solution team:

• May hold overseas investments that 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 a Fund.
• May have a concentrated portfolio, i.e. hold a limited number of investments (35 or fewer) 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.
• 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 use of derivative instruments that may result in higher cash levels. 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.
• 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, 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.
• May target an absolute return. There is no guarantee that an absolute return will be generated over the time period stated in the fund objective or any other time period.

The risks detailed above are reflective of the full range of Funds managed by the Cashflow Solution team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.

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.

DISCLAIMER

This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.

It 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.

This information and analysis 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, no representation or warranty is given, whether express or implied, 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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