Liontrust Balanced Fund

Q4 2019 review

The Liontrust Balanced Fund returned 0.8% over the quarter, meaning it underperformed relative to the IA Mixed Investment 40-85% Shares sector, which returned 2.3%.

Market Overview

Global equities enjoyed a strong quarter as recessionary fears subsided. The main driver behind this was an easing in trade tensions between the US and China, with a phase one trade deal between the two countries agreed towards the end of the quarter. As a result, global bond yields generally rose over the quarter. However, despite this improvement in investor sentiment, value stocks (having rebounded strongly in late Q3 2019), once again underperformed relative to growth stocks. At a sector level, technology led global equities, with healthcare stocks also delivering strong gains. The UK market was one of the strongest performing developed markets, largely driven by the general election result. Not only did the unexpectedly large Conservative Party majority end fears of a Corbyn-led Labour government, given the Tories’ more business-friendly policies, but it also created further certainty regarding the UK’s future relationship with the EU. However, the improved sentiment towards global growth also meant emerging markets outperformed developed markets over the quarter.


Portfolio Attribution

The Fund’s underperformance compared to its average peer was primarily driven by the portfolio’s low relative UK weighting, given the strong performance of FTSE stocks in the aftermath of the general election. The Fund’s exposure to exchange-traded put options also detracted from returns. The largest individual detractor to the Fund’s return was CME Group, the futures exchange. The stock tends to perform strongest on a relative basis during periods of heightened volatility and uncertainty, thanks the increased volumes it witnesses. Therefore, during a quarter when global equities rebounded and recession fears subsided, it was unsurprising the stock underperformed. Other notable detractors included Constellation Software, Ping An Insurance and Intercontinental Exchange.


On a more positive note, the Fund’s exposure to the technology sector was once again additive to the overall return. The five strongest contributors were all tech-related names: Nvidia Group, SVB Financial Group, Alibaba, Microsoft and Alphabet. Nvidia was the Fund’s strongest performer, rallying on stronger sentiment towards semiconductors as well as the stock’s strong underlying fundamentals.



We remain positive in our outlook for global markets. In our view, many of the headwinds that hurt equities in 2019 – such as slowing economic growth and trade war concerns – have receded. Global central banks were ahead of the curve with regards to decelerating growth and we believe the lagged impact of looser monetary policy will mean – barring an external shock – global growth will be 3.5% for 2020. We are therefore confident in our portfolio positioning as we believe this is a supportive backdrop for equities.


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








Liontrust Balanced C Acc






IA Mixed 40-85 Investment Shares













*Source: FE Analytics as at 31.12.2019, on 08.01.2020.

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.




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, January 22, 2020, 9:24 AM