Liontrust GF UK Growth Fund

June 2019 review

The Liontrust GF UK Growth Fund returned 4.0% in June, compared with the 3.7% return from the FTSE All-Share Index.

 

UK stocks joined in the global equity rally in June as indications of looser monetary policy gave investors a reason to add risk. In the US, there has been a growing consensus that the Federal Reserve will need to cut rates, having tightened its policy gradually over the last four years.

 

In its policy meeting in June, members of the Federal Open Market Committee stated that they will “act as appropriate to sustain the expansion”, while also reducing their inflation forecast for this year. Adding to the dovish tone was European Central Bank President Mario Draghi, who noted that additional stimulus would be required in the eurozone if there is not an improvement in the economic outlook.

 

In the UK, political uncertainty was the market’s main concern. Investors determined that a Boris Johnson-led government would increase the chances of a No Deal Brexit as he emerged as the leading candidate to become the next Prime Minister. The pound dropped to its lowest level against the dollar in 2019, not helped by poor data which showed the UK economy shrank by 0.4% in April.

 

The decline in sterling meant that UK large cap stocks, which are predominantly internationally exposed, performed better than mid and particularly small cap companies. The FTSE 100 returned 4.0% in June, while the FTSE 250 rose 2.9% and the FTSE Small Cap (ex-IT) declined 2.3%. Many of the Fund’s large cap holdings benefited from this split in market cap performance. AstraZeneca (+10.4%), BAE Systems (+9.9%), Compass Group (+6.1%) and Royal Dutch Shell (+4.4%) and were among the Fund’s top risers.

 

Company news was fairly sparse in June. Wood Group (+15.5%) has had a difficult time of late, but the oilfield services company’s shares found some relief following a pre-close half year trading update saying it has delivered an improvement in earnings growth and margin. The latter was a result of a strong performance by its Asset Solutions Europe, Africa, Asia and Australia and Environment & Infrastructure businesses. Wood Group maintained its full year outlook for adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation). 

 

Fund supermarket Hargreaves Lansdown (-15.3%) suffered in the wake of the suspension of the Woodford Equity Income Fund. The high profile fund suffered a series of redemptions and manager Neil Woodford announced that withdrawals will be suspended. Hargreaves Lansdown had the Woodford Equity Income Fund in its closely followed Wealth 50 list and has long promoted Woodford. The company dropped the fund from the Wealth 50 list following the suspension.

 

RWS Holdings (+4.8%) delivered double-digit growth in revenue and profit in the six months to end March 2019, driven by its Moravia acquisition. The intellectual property support services company had flagged its strong interim performance in April, which initially sent shares higher. In June, the company added that it is well placed to deliver another record year following an encouraging start made in the second half.

 

Reckitt Benckiser Group (-2.1%) announced a successor to Chief Executive Rakesh Kapoor. The consumer goods company said Laxman Narasimhan will take over the role from the beginning of September after joining from PepsiCo where he is chief commercial officer. 

 

Positive contributors included:

Domino’s Pizza Group (+18.3%), Spectris (+16.0%), Next Fifteen Communications (+11.4%), Halma (+11.2%) and AstraZeneca (+10.4%).

 

Negative contributors included:

Hargreaves Lansdown (-15.3%), AA (-11.5%), PayPoint (-9.0%), Rightmove (-7.6%) and Brooks Macdonald Group (-4.7%).

 

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

 

 

Jun-19

Jun-18

Jun-17

Jun-16

Liontrust GF UK Growth C3 Inst Acc GBP

2.7

10.8

18.9

8.2

FTSE All Share

0.6

9.0

18.1

2.2

 

*Source: Financial Express, as at 30.06.2019, total return (net of fees and income reinvested), sterling terms, C3 institutional class. Non fund-related return data sourced from Bloomberg.

 

**Source: Financial Express, as at 03.07.2019, total return (net of fees and income reinvested), primary class. Discrete data is not available for five full 12 month periods due to the launch date of the portfolio. Investment decisions should not be based on short-term performance.


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. Some of the Funds managed by the Economic Advantage team invest primarily in smaller companies and companies traded on the Alternative Investment Market.  These stocks may be less liquid and the price swings greater than those in, for example, larger companies. The performance of the  GF UK Growth Fund may differ from the performance of the  UK Growth Fund and will be lower than its corresponding Master Fund due to additional fees and expenses.

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.

Wednesday, July 24, 2019, 3:33 PM