Liontrust Balanced Fund

Q3 2020 review

The Liontrust Balanced Fund returned 4.5% over the quarter, outperforming its average peer in the IA Mixed Investment 40%-85% Sector, which returned 1.9%*. This performance places the Fund in the top quartile for the period under review.

After a tumultuous start to the year, markets were comparatively calmer in the third quarter of the year. Despite the resurgence in Covid-19 in some parts of the world, Western economies have started showings signs that they are on the road to recovery. Similar to the previous quarter, this has been driven by a combination of reduced uncertainty around the trajectory and effects of the Covid-19 outbreak, aforementioned early signs of solid economic recovery and continued Government and Central Bank stimulus in particular from the US Federal Reserve. US equities continued to recover from the sharp sell-off in the first quarter of the year and indeed surpassed previous highs that were seen in February before COVID-19 hit. The market continued to take solace from the supportive monetary and fiscal stimulus provided by the Federal Reserve and US government as the US economy gets back on its feet. The rally was also fuelled by the relatively contained rise in hospitalisations and fatalities despite a surge in new COVID cases in July in the Sunbelt states.

As per previous quarters, the Fund benefited from its exposure to technology stocks once again. Technology companies that enable businesses to maintain effective remote workforces, improve digital efficacy and drive operational improvements are showing to be consummate winners, providing growth in a low growth world that rewards long duration assets due to depressed interest rates. Other technology companies that contribute to this rising digital economy by providing ecommerce solutions (either directly or enabling others) providing hardware, software tools for new digital projects all stand to benefit as well. We have seen that Covid-19 has not only accelerated the uptake of these long-standing trends, but likely also increased their long-term scale.

Nvidia was once again a strong contributor to the outperformance of the Fund in the third quarter. The company continues to benefit from providing the semiconductor hardware necessary to sustain the rise in digital solutions. Furthermore, they continue to build on their dominance in GPU design and its recent acquisition of Mellanox to provide the high end equipment for the data centres the cloud infrastructure is built on. The possible upcoming acquisition of ARM for a seemingly bargain price should also increase Nvidia’s scope for success in the area.

Alibaba was another notable driver of the Fund’s outperformance over the period under review. Strong performance can be attributed to China’s ongoing recovery after bearing the brunt of the initial Covid-19 outbreak. Alibaba is an obvious winner in China’s post-Covid economy, providing ecommerce solutions (reducing in-person shopping), digital payments (reducing the need for cash, a potential disease vector) and providing cloud services to Chinese businesses expanding their own digital solutions. Alibaba also has a 33% stake in Ant Financial, the Chinese fintech giant, that is looking to undergo a potential blockbuster IPO at a $200bn to $300bn valuation.

On the other slide of the ledger, the Fund’s exposure to exchange traded put options, having contributed significantly to outperformance as markets felt the force of Covid-19 in the first few months of 2020, was a detractor to overall performance in the third as markets continued their early signs of a recovery.

COVID-19 has been at the forefront of news for most of 2020 and we expect this to continue, but we also expect that US election buzz will steal some of the limelight over the final quarter of the year. Along with this, we expect news to also centre around rising wave of northern hemisphere COVID-19 cases and also progress on the vaccine front.


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








Liontrust Balanced C Acc






IA Mixed Investment 40-85% Shares













*Source: FE Analytics as at 30.09.20


**Source: FE Analytics as at 30.09.20


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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.


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Wednesday, October 21, 2020, 8:59 AM