Liontrust Global Income Fund

April 2019 review

The Fund returned 2.1%* in sterling terms in April compared with 3.1% average return from funds in the IA Global Equity Income sector.

 

Global equities’ march higher continued to stem from the US Federal Reserve’s switch to a more dovish rhetoric and ongoing trade negotiations between China and the US. The market was also enthused by strong economic data from the world’s two largest economies, helping lift the MSCI World Index by 3.5% in sterling terms.

 

The US posted another month of robust jobs growth with a non-farm payrolls figure of 196,000 in March, rebounding strongly from the 33,000 job additions seen in the previous month and outstripping the consensus estimate of 180,000. Importantly for stocks, wage pressure seemed relatively muted which made it unlikely that the Fed would turn its eye back to rate increases.

 

China meanwhile maintained its pace of GDP growth in the first quarter of 2019, with a print of 6.4%. This was despite the trade tensions with the US and above the market’s estimate of 6.3%. Similarly in the US, GDP growth of 3.2% came in considerably ahead of the 2.3% Wall Street forecast. However, this figure was flattered by a build-up in inventories, which could reverse next quarter. 

 

Cyclical sectors led the market in its latest leg higher. In the MSCI World, financials (+6.8%) was the best performing sector, while IT (+6.0%) and consumer discretionary (+5.1%) also made substantial gains. The one outlier in the gainers was communication services (+5.2%), which outperformed other defensive areas such as health care (-2.8%) and utilities (-0.5%).

 

The Fund’s overweight allocation to financials was a tailwind to performance, with strong returns from Deutsche Pfandbriefbank (+13.2%), RMB Holdings (+12.7%) and ING Groep (+8.9%).

 

However, some of the Fund’s defensive names held back overall performance. Spanish electricity company Endesa (-2.7%), Swiss health care giant Roche (-4.7%) and US tobacco group Philip Morris International (-2.4%) were all among this month’s fallers.

 

Though Philip Morris’s shares fell alongside the wider sector, trading remained strong as its first quarter results came in ahead of consensus estimates with adjusted earnings-per-share of US$1.09, marginally beating the US$1.00 forecast by the market. Better than expected cigarette volumes (flat year-on-year) was partially responsible for this, while heated tobacco shipment volumes rose by 20%.

 

De La Rue (+14.3%) bounced back after a decline in March as it announced two new contracts. The company won a five year contract to implement and operate digital stamps on tobacco and soft drink products sold in Saudi Arabia. Separately, it released a statement on the commencement of its joint venture with the Kenyan government on the secure printing of its currency.

 

Positive contributors to performance included:

De La Rue (+14.3%), Deutsche Pfandbriefbank (+13.2%) and RMB Holdings (+12.7%).

 

Negative contributors to performance included:

Vtech Holdings (-11.1%), Spark New Zealand (-5.6%) and Philip Morris (-2.4%).

 

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

 

 

Mar-19

Mar-18

Mar-17

Mar-16

Mar-15

Liontrust Global Income I Inc

4.7

2.3

24.8

-3.3

5.7

IA Global Equity Income

8.5

-1.4

25.4

-1.8

12.6

Quartile

4

2

3

4

4

 

*Source: Financial Express, as at 30.04.2019, total return (net of fees and income reinvested), bid-to-bid, institutional class. Non fund-related return data sourced from Bloomberg.

 

**Source: Financial Express, as at 31.03.2019, total return (net of fees and income reinvested), bid-to-bid, primary class.

 

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 Cashflow Solution team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The Liontrust European Growth Fund holds a concentrated portfolio of stocks, if the price of one of these stocks should move significantly, this may have a notable effect on the value of the respective portfolio. The Liontrust Global Income Fund's expenses are charged to capital. This has the effect of increasing dividends while constraining capital appreciation. 

 

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.

Friday, May 17, 2019, 12:28 PM