- Volatility and uncertainty spike after US tariffs announcement, with corporate newsflow often overshadowed by macroeconomic worries.
- Belimo Holding tops the portfolio risers after raising full-year guidance, with price increases mitigating the cost impact of tariffs.
- By contrast, Partners Group falls after estimating a 1% - 3% earnings hit on private equity investments from tariffs.
The Fund’s A5 share class returned 0.2%* in euro terms in April. This Fund’s target benchmark, the MSCI Europe Index, returned -0.8%.
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.
Over April, portfolio returns were largely reflective of an environment where macroeconomic and political uncertainty took prominence over corporate newsflow.
However, the Fund’s top riser – Belimo Holding (+34%) – 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.
Despite the high level of uncertainty around tariffs, some companies nevertheless attempted to update investors on the estimated impact on their operations. One of these was Partners Group (-12%), the private markets investment specialist. It provided an initial assessment of the Liberation Day trade tariffs. A review of over 75 direct assets across private equity and infrastructure found only a small proportion with a meaningful exposure to tariffs. While 71% of its private equity assets have a projected earnings impact of less than 1%, and 22% face a modest 1% to 4% headwind, tremainder could see earnings fall between 5% and 20%. On average, the negative earnings impact across its private equity portfolio is estimated to be between 1% and 3%. For its infrastructure investments, there is now direct trade exposure to tariffs and only six out of 36 have supply chain exposure. All of these are expected to be able to fully pass through any cost increases.
While TotalEnergies (-13%) issued solid Q1 results, its outlook statement illustrates why energy was easily the weakest sector in the MSCI Europe index in April, down 15%. TotalEnergies states that the oil demand outlook has softened since the trade tariff announcement, with oil prices falling and refining and petrochemical margins expected to remain weak. The Brent crude oil price dropped sharply from around $75 a barrel at the start of the month to end April close to $63.
Positive contributors to performance included:
Belimo Holding (+32%), 3i Group (+15%) and Auto Trader Group (+11%).
Negative contributors to performance included:
Mediobanca (-16%), TotalEnergies (-14%) and Partners Group (-12%).
*Source: Financial Express, as at 30.04.25, total return (net of fees and income reinvested).
Key Features of the Liontrust GF Pan-European Dynamic Fund
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.
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. 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.
