Liontrust Balanced Fund

Q3 2019 review

The Liontrust Balanced Fund returned 3.7% over the quarter, meaning it was a top quartile performer in the IA Mixed Investment 40%-85% Shares sector, where the average return was 2.0%. This means the Fund continues to be a top quartile performer over one, three and five years.

Market Overview

It was a volatile quarter, with macro factors dominating markets. The key issue over the quarter was the ongoing US/China trade war, which fed into concerns about a global economic growth slowdown. However, at the same time, central banks remained highly supportive, with the US Federal Reserve’s rate cuts providing a floor to equity markets. Though this initially meant bond yields continued their well-trodden downward path, fixed income markets sold off heavily in early September. There seemed to be little economic data to support these moves, with the signs suggesting many investors were simply taking profits from what had become a very crowded trade. This move in bond yields had a profound effect on equities, as there was large rotation within the market with value stocks, having considerably underperformed over the course of 2019, enjoying a sharp rally in September as global bond yields rose. As a result, high growth areas of the market (such as certain parts within the technology sector), witnessed a painful de-rating.

Portfolio attribution

The Fund’s outperformance relative to its peers was largely a result of its low fixed income weighting, with the portfolio benefiting on a relative basis from the spike in bond yields in September. The strongest overall contributor to the Fund’s return was Alphabet, which rallied strongly following a very positive update to the market, which in part was due to improved revenue relating to its advertising and cloud gaming platforms. Outside of Alphabet, the strongest performers tended to be our more defensive holdings including Brown Forman and CME Group (which tends to benefit during periods of heightened market volatility). The key detractors to returns included some of our higher growth names, which – having performed very strongly over the course of 2019 – were hit disproportionately hard as bond yield rose and value stocks rebounded. Furthermore, our China related stocks such as Mandarin Oriental, Tencent and Baidu detracted from returns as a result of negativity surrounding US tariffs, Chinese growth and the Hong Kong protests.


Despite the ongoing uncertainty thanks to the US/China trade war, we remain relatively optimistic in our outlook for the global economy. Fears surrounding global economic growth continue to weigh on investor sentiment, but we believe fears of a recession in the US are considerably overblown and while Chinese growth is slowing, we believe the authorities have a huge amount of tools at their disposal (both in terms of monetary and fiscal policies) to offset the impact of US tariffs. We therefore believe the macroeconomic backdrop remains supportive, particularly within emerging markets where valuations remain low economic growth continues to improve. Despite the more dovish rhetoric from the US Federal Reserve, we continue to view traditional fixed income as an asset class that is fraught with risk given the low yields on offer.

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








Liontrust Balanced C Acc






IA Mixed 40-85 Investment Shares













*Source: Morningstar as at 30.09.2019, on 17.10.2019.

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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.




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, 9:03 AM