US markets rebounded sharply from tariff-driven volatility, with the Fund outperforming its benchmark over the quarter. Semiconductor names Broadcom, Cadence Designs, and KLA Corp, along with Trupanion and TransMedics, led gains, while the addition of Ingersoll Rand strengthened exposure to industrial efficiency theme.
The Sustainable Future US Growth Fund rose 11.8% over the quarter, outperforming the MSCI USA Index by 0.6% and the IA North America peer group by 1.1%, putting the fund in the second quartile for the quarter.
After a tumultuous end to the first quarter driven by the fallout from the bout of tariffs unleashed on the world by Donald Trump, the market rebounded strongly and shook off concerns that tariffs would hurt the global economy. Thankfully, deadlines keep being pushed back and there appears to be a pragmatism in the market that the administration's goal isn't to plunge the world into a recession and that the headline grabbing statements are being used more as bargaining tools with other nations.
Top contributors came from a broad range of companies during the quarter, though the fund did benefit strongly from its exposure to companies in the semiconductor industry. Broadcom, Cadence Designs and KLA Corp all featured in the top contributors. The pet insurance company, Trupanion, also had a strong quarter, with the share price rising 49% as profitability continues to recover after a few difficult years for the company. Lastly, the share of price of Transmedics, the company that helps reduce the waitlist for organ transplants, almost doubled in the quarter, rising 99%. During the quarter we added Ingersoll Rand to the Fund. Ingersoll Rand is a $36 billion US listed company, exposed to our 'improving industrial and agricultural efficiency' theme through the equipment and services they sell to a wide range of end markets. In particular, they are the market leader in compressors, which makes up over 50% of the company's revenues and globally accounts for 10% of electricity usage in the manufacturing sector. The large part of the company's industrial exposure has experienced several years of depressed investments and so we took the opportunity to acquire shares in the business due to our five-year investment horizon at a very attractive valuation. The market in the last couple of years has been really driven by a handful of very large companies. Now our mission is to invest in companies that make the world cleaner, healthier and safer and this typically leaves our Funds with a strong mid-cap bias and away from those mega cap companies. Over recent years, this has hurt relative performance, but this has left these companies trading on very undemanding multiples at a period when the rest of the market is relatively expensive compared to its history. We are therefore very excited for the future prospects of the relative returns for this Fund in the years to come.
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.
- All investments will be expected to conform to our social and environmental criteria.
- 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. If one of these investments falls in value this can have a greater impact on the Fund's value than if it held a larger number of investments.
- 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.
- 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.
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.
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