Liontrust Global Smaller Companies Fund

The Liontrust Global Smaller Companies Fund returned 3.3% in May, compared with the 5.1% return of the MSCI ACWI Small Cap Index and an average return of 5.1% in the IA Global sector, its comparator benchmarks.

Global equity markets recovered in May after a tough April rocked by tariff announcements, bond yield volatility and geopolitical negotiations. The US President’s softening stance on tariffs – announcing pauses and negotiations with major partners – led to a relief rally in some of the hardest hit sectors (particularly consumer and materials). However, the announcement of a large US tax and spending bill led to a further increase in US long-dated bond yields as markets worry about America’s ability to service its debts in the long term. Higher long-end rates and continued elevated political uncertainty continues to weigh on both consumer and corporate spending plans.

In Europe, the environment is relatively more stable, with falling inflation, positive fiscal impulse (particularly in its largest economy Germany), and continued central bank rate cutting. In Japan, inflation remains elevated and institutions stepped away from long term bond auctions, leading to a sharp increase in the 30-year yield. Value stocks tend to outperform quality growth stocks as yields increase, and that has certainly been the case in Japan this year.

The portfolio underperformed the index over the month. Our energy stocks fell as global industrial demand data has been negative over the month. Our positions in leading residential construction related companies in the US were weak as the prospects for near term growth in new home sales is held back by mortgage rates. On the positive side, our semiconductor-related companies rallied in May in line with a general tech sector recovery.

Top contributors:

• Interparfums (+24% total return in sterling terms) – the shares have now rallied some 35% from their April lows. A brilliant international fragrance developer and distributor still led by its two co-founders, with an exceptional long-term financial track record and well exposed to attractive secular growth in global fragrance adoption. The stock was hard hit during April on tariff announcements and hit a decade-low valuation but has now recovered the lost ground as tariff pauses and negotiations have been announced.
• Objective Corporation (+22%) – this is a market leading software provider to local councils in Australia, New Zealand and the UK, with expansion opportunities in the US. Its software is mission critical to regulatory workflows, has very high retention rates, and the business has a solid track record of innovation and product upsell. The company is led by its founder who retains a 65% equity stake. The shares have benefitted recently given Objective’s relative stability and defensiveness in an uncertain macroeconomic environment, as well as delivering continued strong revenue growth and profitability.
• Gaming Realms (+20%) – a company with unique IP, that continues to deliver strong revenue growth, profit expansion and successful new product development in the burgeoning US gambling market. The shares have been strong since the impressive results in March. 

Largest detractors:

• Aris Water Solutions (-13%) – the company delivered strong operating results, but forward-looking guidance was conservative, given a lower oil price reduces drilling activity and return on investment on new well construction in the Permian.
• Sysmex (-10%) – it reported solid results and we remain excited about the medium-term outlook for its new flagship haematology machine which improves reagent throughput and lab productivity. However, the company guided for a slower pace of sales in 2025 due to the impact of tariffs.
• Classys (-9.5%) – the shares have performed very well in 2025, as the business reported very strong export growth for its skin rejuvenation technologies. Private equity firm Bain Capital owns c.54% of the company and reduced its position via a share placing in May which put pressure on the stock. 

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

* Source: FE Analytics, as at 31.03.25, total return, net of fees and income reinvested. The current fund managers’ inception date is 14.01.25.

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 Economic Advantage team:

• May invest in smaller companies and may invest a small proportion (less than 10%) in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, a 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 a fund to defer or suspend redemptions of its shares. May invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
• 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.
• May invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
• 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.

The risks detailed above are reflective of the full range of Funds managed by the Economic Advantage 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.