Liontrust European Opportunities Fund

Q3 2019 review

The Liontrust European Opportunities Fund returned -2.2% in the third quarter of 2019, compared to 1.7% from the MSCI Europe ex UK Index and 0.5% from the IA Europe ex UK sector.

Market overview

The primary driver of global markets during the third quarter was the renewed escalation of the US – China trade war with further tariffs being applied by both sides in August, although September saw some improvement in risk appetite as both sides agreed to face-to-face talks in October and some tariffs were delayed. The Fed cut rates by 50 basis points during the quarter and more cuts are expected before yearend. The ECB cut its deposit rate by a further 10bps to -50bps and restarted its QE programme on an open-ended basis, while introducing tiering to its Targeted longer-term refinancing operations (TLTRO) programme to provide a little breathing space for the banking sector.

Global bond yields continued their decline with the entire German yield curve falling into negative territory. The move in yields, trade war escalation, and further weakness in economic data continued to favour growth over value and bond proxies with utilities, real estate, consumer staples and healthcare leading gains while more cyclical areas lagged.

Outlook

The portfolio maintains a strong value bias, with valuations at a material discount to both the market and peers. As recession fears recede and risk assets are supported by a more dovish Fed and stimulus measures in China, we see room for the sharp outperformance of growth over value to begin to reverse.

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

 

Sep-19

Sep-18

Sep-17

Sep-16

Sep-15

Liontrust European Opportunities C Acc

-10.8

-4.5

45.8

10.0

-1.3

MSCI Europe ex UK

6.8

2.2

22.4

21.0

-0.8

IA Europe ex UK

2.2

1.9

21.9

19.2

3.4

Quartile

4

4

1

4

4

 

*Source: Morningstar as at 30.09.2019, on 17.10.2019.

 

For a comprehensive list of common financial words and terms, see our glossary here.

 

 

Key Risks

 

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in funds managed by the Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.

 

Disclaimer

 

The information and opinions provided 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. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.

Tuesday, October 22, 2019, 2:35 PM