Liontrust Global Alpha Fund

• Investor confidence returned in June amid easing trade tensions, calmer geopolitical environment and robust earnings.
• The S&P 500 ended June at a new all-time high after rising 5% over the month, although the dominance of the Magnificent Seven continued to wane as market leadership broadened out. US dollar weakness continued with the Dollar Index falling 10.7% in the first half of 2025 – the weakest performance since 1973 and the Bretton Woods agreement.
• European market returns were more sedate (+2.4%) but year-to-date returns continue to outshine the US.
• The Fund’s good monthly performance was led largely by its technology holdings.

The Liontrust Global Alpha Fund returned 3.4%* in June, compared with the 2.8% return of the MSCI ACWI Index comparator benchmark and the 2.4% average return in the IA Global sector (also a comparator benchmark).

Market backdrop

The US market performance moved beyond the Magnificent Seven dominance of recent years as the group’s performance has become more disparate: only two names – Nvidia and Meta – outperformed meaningfully in June whilst Apple and Tesla underperformed. In fact, Apple, Tesla and Alphabets year-to-date returns were a disappointing -18%, -21% and -7% respectively at the mid-point of the year.

Technology and communication services still led the performance table, confirming the broadening out of market leadership. Growth and technology stocks were boosted by the prospect of up to three rate cuts in the US before year end, driving longer-duration growth names to rally. The consumer staples sector was the laggard in the month, falling 2% as fears of tariffs impacting consumer confidence did not recede.

Although European market returns in June were more sedate, the year-to-date gain – 23% for the Eurostoxx 50 –has for once outshone the US, with Germany’s DAX rising a record breaking 35.9% in the first half of 2025.

Portfolio review

Technology led Fund performance, with SK Hynix (+44% in sterling terms) and Seagate Technology (+21%) the largest contributors. Coinbase (+40%) also featured at the top end of the leaderboard as the crypto exchange benefitted from the passing of the ‘Genius Act’ which was viewed as significant milestone for the crypto industry.

On the flip side, holdings in Visa (-4.3%) and Mastercard (-5.6%) dragged as investors marked the shares down on fears that stablecoin could take share from the payments platforms. We believe that over the long term, Visa and Mastercard will evolve and adapt to encompass stablecoin payments, so remain positive on the holdings.

Our private holding in Ultromics also dragged as the latest funding round proved challenging. We are reassured that the longer-term outlook remains positive.

Portfolio Changes

During the month we reduced names which were approaching near-term price targets following strong recent outperformance. These included Paypal, SAP and Costco. 

We rotated this capital into our China exposure through a new position in Alibaba and adding to the EV automaker BYD. China/US trade tensions have eased and the valuation gap to global peers remains very attractive at current levels. China now represents 6% of the portfolio.

We also initiated a position in Atlassian, a company we have owned in the past. Atlassian has enjoyed continued strong cloud migration and growth as well as making strong progress on its AI platform, which has become stickier, added more value, and extended its reach across every team in the enterprise. Our intrinsic valuation suggests over 30% upside to the current share price.

Outlook

Global geo-political risk is high, led by a US administration that is putting America first. This creates a backdrop that requires a much more careful assessment of risk versus reward. We believe that risk-adjusted returns will be front and centre of investors’ minds running through the second half of the year.

Thematically, we remain positive on the potential for AI to drive significant benefits across all industries and continue to work on identifying winners.

We have waited patiently for the crypto world to unfold and the IPO of Circle Internet could act as a Chat GPT moment for Stablecoins. This will benefit the entire blockchain/crypto supply chain and – together with fintech – remains a key theme for the rest of this year. 

Our base case is that equity markets globally remain little changed in the second half of the year, but that the polarisation of winners and losers will remain significant.  In this environment, overall market returns will be less important and, for the first time in many years, stock selection outside the very biggest companies in the world will matter, as will geographical diversification.

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.

DISCLAIMER

This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. 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.

This 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. It contains information and analysis that 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 of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust.