Liontrust European Growth Fund

April 2021 review

The Fund returned 4.1%* in sterling terms in April. The MSCI Europe ex-UK index comparator benchmark returned 4.2% and the average return made by funds in the IA Europe ex-UK sector, also a comparator benchmark, was 4.1%.

 

The drivers of April’s equity market gains were the familiar themes of improving economic outlook due to the robust global vaccine rollout, while governments and central banks maintained accommodative policy. US Federal Reserve Chair Jerome Powell said the central bank is a long way from its economic goals, indicating that any tightening in monetary conditions is still some distance in the future. In addition, President Joe Biden unveiled plans for fresh stimulus worth US$1.8 trillion for American families, which would be funded by tax hikes on the wealthy.

 

All sectors in the MSCI Europe ex-UK Index, except for energy (-2.1%), ended April higher in sterling terms. The best performers were consumer staples (+7.5%), IT (+6.8%) and consumer discretionary (+5.1%).

 

There were a number of positive updates from holdings in April. Finnish plumbing and water infrastructure company Uponor (+31%) said activity in residential markets and building solutions has maintained the high levels of activity seen during the first few months of the year and it anticipates this continuing. It now expects 2021 operating profit to remain stable versus 2020, having previously guided to a decrease.

 

AP Moller-Maersk (+6.5%) was another holding to raise guidance. The integrated shipping company said there was higher demand and a squeeze in supply for container shipping in the first quarter, leading to a 5.4% year-on-year increase in volumes and 35% increase in average rates for its Oceans business. These extraordinary conditions are expected to last for the remainder of the year and, to reflect this, the company raised full-year guidance for earnings before interest and taxes (EBIT) to US$9bn-US$11bn from US$4.3bn-US$6.3bn, while free cash flow forecasts were raised to US$7bn from over US$3.5bn.

 

Danish brewer Royal Unibrew (+18%) reported market-beating results. The company’s off-trade business was a particular area of strength, helping it deliver net revenue of DKr1.61bn and earnings before interest and taxes (EBIT) of DKr229m, which beat analyst estimates by 8.7% and 18% respectively. Going forward, Royal Unibrew expects the easing of restrictions to boost its on-trade business. It has therefore narrowed its full year EBIT guidance to DKr1.53bn-DKr1.63bn from DKr1.48bn-DKr1.63bn.

 

Despite reporting a sharp rise in Q1 profit, Total’s (-5.5%) shares ended the month lower. The oil major benefitted from higher crude oil and gas prices, which rose 38% and 24% respectively on a quarterly basis. Adjusted net income of US$3bn is now above pre-crisis levels, while cash flow rose to US$5.8bn.

 

Away from earnings, shares in German fertilizer company K+S (+11%) leapt higher after the US Department of Justice permitted the sale of its Americas salts business to Stone Canyon. The company added that it does not see any further antitrust hurdles to the US$3.2bn sale.

 

Positive contributors to performance included:

Uponor (+31%), Bank of Ireland Group (+18%) and Royal Unibrew (+18%).

 

Negative contributors to performance included:

Total (-5.5%), Stellantis (-4.8%) and Epiroc (-4.3%).


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

 

Mar-21

Mar-20

Mar-19

Mar-18

Mar-17

Liontrust European Growth I Inc

54.9%

-8.3%

-0.1%

0.6%

30.3%

MSCI Europe ex UK

33.5%

-8.3%

2.2%

3.0%

27.2%

IA Europe Excluding UK

39.6%

-9.4%

-1.2%

5.6%

23.7%

Quartile

1

2

2

4

1

 

*Source: Financial Express, as at 30.04.21, 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 31.03.21, 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.

Thursday, May 13, 2021, 11:09 AM