Global political uncertainty and rising recession fears weighed heavily on performance this quarter, particularly for mid-cap holdings. While the near-term outlook remains clouded, the Fund continues to focus on long-term themes such as Enabling healthier lifestyles – exemplified by the addition of IDEXX Laboratories, a leader in animal diagnostics driving the humanisation of pet care.
A new idea that we've added to the Fund is in our 'Enabling Healthier Lifestyles' theme. It's called IDEXX Laboratories. There is strong evidence that pet ownership is linked to better physical and mental health. The benefits are driven by many factors, including the exercise that comes from having a pet, more social connections and even improvements in the chemistry within our brains, as a chemical called oxytocin is released when we interact with our pet. This in turn leads to lower stress within the body. Pet ownership is also becoming more popular, particularly amongst younger generations who tend to treat their beloved pets more like children. This leads to what we call the humanization of pet care. This is the trend for life science technological advances within human health being utilised within the pet space. The result is pets that live longer, healthier lives. At the heart of this trend is IDEXX Laboratories, who have been a pioneer in the animal diagnostic space for decades. They have a 50% market share and provide end-to-end solutions for vets. IDEXX Labs is a high-growth, high-quality company which benefits from the humanization of pet care ensuring a healthier life for millions of pet owners across the globe.
The Sustainable Future Global Growth Fund fell 7.7% over the quarter. This was behind the MSCI World, which fell 4.5% over the same period, and the IA Global peer group, which fell 4.5% also. This put the Fund in the third quartile versus the peer group. The key driver of performance and of the overall market in the first quarter was the rapidly changing political landscape as the new Trump administration pushed forward with their agenda on tariffs, which will likely cause much damage to the status quo within the global economy. The first quarter saw all the optimism which markets had greeted the Trump win in the final quarter of 2024 completely erase as markets began to price in the idea of a recession in the US as tariffs are pushed through. This, in turn, hurt the Fund's mid cap exposure over the quarter.
The outlook globally is currently more difficult to predict than any point in recent memory. On the one hand, the punitive tariff policy being pursued by the world's largest economy is highly likely to cause a recession as higher prices and lower growth shocked the global economy over 2025. On the other, this could all be a bluff as President Trump looks to ensure he can extract the best deal possible before agreeing new terms on a bilateral trade deal with his biggest trading partners. Uncertainty is becoming the biggest issue now within this high-stakes game. And with uncertainty, you have a lack of investment from businesses across the world. This in itself makes us cautious as we move through the second quarter of 2025.
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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.
The Funds managed by the Sustainable Future Team:
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- 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.
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