Liontrust GF Global Alpha Long Short Fund

• Global equity markets rebounded strongly in May reversing April’s tariff-driven declines and bringing year-to-date returns back into positive territory.
• Technology stocks led the rally globally while healthcare lagged due to regulatory concerns and company-specific issues; developed markets outperformed emerging markets as dollar weakness paused.
• Portfolio activity included adding to high-conviction positions, capitalizing on the improved tariff outlook and positive stock-specific T-score signals.
  
  

The Liontrust GF Global Alpha Long Short Fund returned 4.0%* in May, compared with the 0.4% return of the Secured Overnight Financing Rate reference benchmark and the 2.6% return of the

HFRX Equity Hedge (USD) Index, also a reference benchmark.  

Market backdrop

US equity markets surged in May, with the S&P 500 up 6.2% in US dollar terms, the strongest monthly performance since November 2023 as markets continued to rebound from tariff-related April lows.  

Whilst the rally was broad based, the technology sector led the rebound, rising 9.4%, followed closely by communication services (+7.2%) and industrials (+7.2%). In fact, the only sector to decline in May was healthcare (-4.4%), led lower by regulatory concerns and company-specific (UnitedHealth) challenges.  

Developed markets outperformed emerging markets in the period, a reversal of the prior three-month trend, possibly driven by a pause in dollar weakness which has been a key feature year to date.  

Central banks globally signalled a more dovish stance in the face of the tariff-related economic uncertainties with those in Europe (ECB), Sweden, Canada, New Zealand and UK reducing interest rates in May. 

Portfolio review

The long book contributed 8.5% to portfolio returns whilst the short book detracted 3.7% in the month. The Fund’s net exposure was reduced over the month from c.45% to c.35% with gross exposure also lower – in a range of 110% to 130% – reflecting a heightened risk awareness.

The best performing strategies over the month included AI infrastructure, financial services and defence spending.

– AI Infrastructure: the long position in Seagate Technology (+30%) led this basket’s performance as the shares surged on strong Q1 results and a successful analyst day which led to significant upgrades to earnings forecasts. T-Scores led the risk management of this position, allowing the Fund to move to a very high conviction level, adding to the position both ahead and after the meeting. 
– Defence spending: we are net long a basket of defence names which continue to benefit from heightened geopolitical risks and the increasing pressure on governments to increase defence budgets. In this instance, the short book also contributed as a result of the negative impact of DOGE on defence consulting. 
– Financial services: on the long side Plus500 (+12%) and Robinhood Markets (+35%) performed strongly, balanced by a drag from a short asset manager which rallied on low quality corporate news. 
On the negative side of attribution, the mobility and crypto baskets dragged on performance. In mobility, the short in a US EV maker was the main negative. However, T-Scoring drove a reduction in the position size – thus mitigating a worse outcome. In crypto, it was our net short position in a rallying market that was the drag – the Fund is long industry leader Coinbase and short some of the miners.

Portfolio changes

• AI Infrastructure: we removed Cadence and Monolithic on the short side and added to the Seagate long. We also added a new short in Western Digital as a partial hedge for the large Seagate position that rose to a >5% position by month end. 
• Consumer: this strategy moved from net long to net short, reflecting consumer spending trends. We removed Amazon as a long hedge and took off the Etsy short, adding to the Ocado short.
• Fintech: we reduced the net long from +4.6% to +1.8% by adding on the short side to an Insuretech name based on accounting concerns whilst also selling the Upstart long.
• Mobility: we moved from flat to net long upon reducing the short in a US EV manufacturer.

Outlook

Markets remain dominated by uncertainty. Economic growth seems to remain robust but the interplay with inflation concerns and resultant interest rate levels leaves us adopting a balanced approach to net exposure.

We have carefully assessed the risks by Fund sub-strategy and where possible we have mitigated net exposure to both the US market as a geography and to the IT sector. Markets are very clearly living their risk appetite through technology and high growth names and so matching off these factors on both sides of the book is crucial to maintaining alpha generation.

While risks do remain unclear at best, there is a resultant disparity between winners and losers that has widened and offers the perfect fishing ground for long/short investing. It is for this reason that we remain extremely positive on the opportunity for Fund regardless of what the market chooses to do.

Source: FE Analytics, as at 31.03.25, total return, net of fees and income reinvested. *The Fund was launched on 24 January 2025 to receive the assets of GAM Star Alpha Technology, which was a sub-fund of GAM Star plc (“the merging fund”), which was very similar to the Fund. Because of the similarities between the merging fund and the Fund, the past performance of GAM Star Alpha Technology C Acc - EUR share class has been used for periods prior to the Fund’s launch date.

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, 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. The Fund will invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. The Fund may invest in emerging markets which carries a higher risk than investment in more developed countries. 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.

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